Execution Risk and or a Trap: Russia linked options and ETFs

Bad_Badness

Bad_Badness

I wonder:

1) Were these Puts were sold in "bad faith".
2) The details on how the ETF managers are really handling this situation.

https://www.bloomberg.com/news/arti...against-russia-can-t-cash-out?srnd=markets-vp

"... she found herself hamstrung and unable to exercise her put contracts on the VanEck Russia ETF, some of which are set to expire Friday...

At stake is about $370 million: That’s the value of open interest on all put options expiring this year for a group of Russia-tied securities, including the VanEck Russia ETF, Direxion Daily Russia Bull 2X Shares, Yandex NV, Qiwi Plc, Ozon Holdings Plc, Mobile TeleSystems PJSC and Mechel PJSC

Options Clearing Corp., an anchor of the marketplace, also shifted its policies. Under normal circumstances, the clearinghouse automatically clears options transactions that are in the money -- or when the strike price exceeds the market value of the underlying security. For options on a group of Russian securities, however, OCC said it won’t automatically clear the transactions."

In any case, it is something that should be in the Trading Plan.
 
They should have allowed the options to be closed as those buyers of put options, were buyers in good faith. It turns out, large US financial institutions own Russian debt too. Will the US government allow these companies to take those huge losses? If they do, it will be US taxpayers again, put on the hook for the losses. Our no good US politicians will make sure their rich financial backers are made whole. What they should do is allow these US financial companies to collect against the frozen Russian dollar reserves, $630 billion, more than enough to pay them off. Of course, Russia will not be in default if they allowed it to payoff the creditors.
 
Bad_Badness said:
I wonder:

1) Were these Puts were sold in "bad faith".
2) The details on how the ETF managers are really handling this situation.

https://www.bloomberg.com/news/arti...against-russia-can-t-cash-out?srnd=markets-vp

"... she found herself hamstrung and unable to exercise her put contracts on the VanEck Russia ETF, some of which are set to expire Friday...

At stake is about $370 million: That’s the value of open interest on all put options expiring this year for a group of Russia-tied securities, including the VanEck Russia ETF, Direxion Daily Russia Bull 2X Shares, Yandex NV, Qiwi Plc, Ozon Holdings Plc, Mobile TeleSystems PJSC and Mechel PJSC

Options Clearing Corp., an anchor of the marketplace, also shifted its policies. Under normal circumstances, the clearinghouse automatically clears options transactions that are in the money -- or when the strike price exceeds the market value of the underlying security. For options on a group of Russian securities, however, OCC said it won’t automatically clear the transactions."

In any case, it is something that should be in the Trading Plan.
More...

Maybe, those who sold the put options have connections to top US government officials and politicians? That is the only rational explanation for it. So, they will profit regardless of what is actually happening in the financial markets? Everyone else, loses their monies? It is corrupt as hell when regulators, politicians, foreign governments are able to act with impunity and not subject to any laws? This is not the first time of course. Remember the GM bondholders who happen to be retirees? The US government took all their shares and gave it to the UAW. US bondholders was paid $0.10 on the dollar. US politicians did not care.
 
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IBKR are allowing you to exercise on the last day. You have to open a ticket and contact the support.

However, my problem is that I have a vertical put spread. Not exercising my longs is obviously gonna cost me a lot. However, If i exercise I risk having a sizeable short position with a huge borrowing fee. Last time it was about 40%
 
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