ES option expiration "screw up"

R

RichardRimes

If you trade ES options you might have an interest. On Friday saw an opportunity to get 7 pts by selling a 55call and 60 put so if we ended up between the two I'd net out 2 pts on the trade.

Plan was great as we ended up at 59.75 (set was 57.70)....however TOS exercised the call so I ended up short @55 but didn't exercise the put which of course would have offset the call. I double checked the CME rules

"European Style. Exercisable only on expiration day. On expiration day, all in-the-money options as of 3:00 p.m. CT will be automatically exercised. Contrarian instructions are not allowed. Exercisable only on expiration day."

went back on the minute chart and saw at 15:59 ES was 60.02 and at 16:00 it was at 59.75. I guess the trade desk clock is off.
While it so far is working to my advantage since set is 1457.70 and could easily open soft on Sunday...I need to close the short on Sunday nite and don't like the risk associated with having this short.

soooo even when you know the rules your broker can still screw you up!:confused:
 
What makes you think the broker made a mistake when the CME creates the rules and the FCM follows them? Sounds like it was your mistake for not covering.
 
Quote from RichardRimes:

The broker had no problem closing the short call...why didn't they close the short put? I made a choice...THEY make a mistake:)
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I should amend that...they don't close the call and put...it SHOULD have automatically been exercised PER CME rules.
 
Quote from RichardRimes:
...it SHOULD have automatically been exercised PER CME rules.
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Are you SURE the put was in the money? This is the settlement specification:

A 3:00 p.m. CT price fixing (symbol ESF) based on the weighted average traded price of E-mini S&P 500 futures in the last 30 seconds of trading on expiration day (2:59:30 pm–3:00:00 pm Chicago time) will be used to determine which options are in-the-money.
 
atticus...at the time of the sell which was around 1pm I had a chance to sell the call for 4.5 and shortly later the put for 2.5 and felt with just a couple of hrs to go it would be a decent trade. I also didn't mind getting stuck long or short.

good pt rwk...the chart I looked at was one minute..so you could be right and it could have ticked above 60 in the last 30 sec. Who's clock counts?

It would seem to me that being exercised would wait until settlement at 3:15 and the "settlement" price. but what the hell do I know.
 
Quote from rwk:

Are you SURE the put was in the money? This is the settlement specification:

A 3:00 p.m. CT price fixing (symbol ESF) based on the weighted average traded price of E-mini S&P 500 futures in the last 30 seconds of trading on expiration day (2:59:30 pm–3:00:00 pm Chicago time) will be used to determine which options are in-the-money.
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I think your right....at the end there was a flurry of 60's so the weighted average might very well have been above 60. Actually feel better. It appears that I actually lucked out...assuming we don't open 20 pts higher on Sun:D
 
Quote from RichardRimes:

If you trade ES options you might have an interest. On Friday saw an opportunity to get 7 pts by selling a 55call and 60 put so if we ended up between the two I'd net out 2 pts on the trade.

Plan was great as we ended up at 59.75 (set was 57.70)....however TOS exercised the call so I ended up short @55 but didn't exercise the put which of course would have offset the call. I double checked the CME rules

"European Style. Exercisable only on expiration day. On expiration day, all in-the-money options as of 3:00 p.m. CT will be automatically exercised. Contrarian instructions are not allowed. Exercisable only on expiration day."

went back on the minute chart and saw at 15:59 ES was 60.02 and at 16:00 it was at 59.75. I guess the trade desk clock is off.
While it so far is working to my advantage since set is 1457.70 and could easily open soft on Sunday...I need to close the short on Sunday nite and don't like the risk associated with having this short.

soooo even when you know the rules your broker can still screw you up!:confused:
More...

this is why your PUT did not get excercised. the fix price was 1460.59.

http://www.cmegroup.com/trading/fixing-price.html?tabs=20
 
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