Going Through Call Option Expiration

[Randy888]

But the question is not about in the money short options. It is about in the money long options, which give the holder the right but not the obligation to exercise. There are good reasons why the holder might not wish to exercise an in the money long option at any time prior to expiration, and he/she actually has no obligation to do so. (I might hold an option to buy your house by tomorrow, but I am under no obligation to do so, even if just prior to expiration I could buy your house below market value.) The brokers have simply decided that they will behave as though the holder does have such an obligation. The question is why the brokers haven't decided to let unexercised in the money long options expire, but as I said, there is commission income at stake here.

Absolutely agree. They are forcing you close(obvious for the commission lol, I wonder do they also close if ur not in the money and just charge few $$ from you lol, in case when closing costs 3$ but option is worth 0.1$ ). What if I'd like to close it not ~2pm but say 2:25PM .. basically the closer to the expiration the option goes the bigger margin is required.

there is no reason why not to have some option like: "the option either expires or we sell it in the market"(Considering you refute your chance for execution).
Why the broker should execute your option if you don't have enough cash in the acc?!
just close it.
This is a scam by the brokers to Force collect the commission.

 

[gaussian]

what if the boogyman were out there to get us?!
Funny how you absolutelly incorectly assume stuff lol.

Hanlon's Razor is a good answer to this. A trait of new traders is to blame everyone but themselves for their losses. I just thought it was funny how what you wrote was the kind of thing you see in all sorts of trader psychology books.

Will cosider some wiki posts buy I already know more than it is needed.

So now u tell me do you have algorytms that trade for you? Or should i suggest for u to read a few books..

First statement tells me you're the new wall street star. Second statement tells me I insulted your intelligence by suggesting you read before losing your money in the markets. I wont even address this further. I think it speaks for itself.

The question is why the brokers haven't decided to let unexercised in the money long options expire, but as I said, there is commission income at stake here.

This is pure conspiracy theory. The rule enforcement comes from the CBOE and the OCC. Your particular broker may nefariously exercise your options but good brokers don't.

Let's use another razor, this time instead of Hanlon's Razor let's apply Occam's Razor. The simplest explanation is often the correct one - so here it is.

You're a trader and you left for your dream vacation on some remote carribean island for a week. The third friday of the month comes around, and you're deep ITM on some AMD. You come back and realize you never exercised your option! Worse yet, AMD just took it's brief rally to the stars. You're upset, you call your broker and scream at them "WHY DIDNT YOU JUST EXERCISE MY OPTION". You're out your money from all those gains you could've had and you had fully intended to exercise. How frustrating.

Your solution would require even more expensive commissions. Why? In order to execute your solution the broker would need to know the intention of every trader holding options with them. You practically need a broker on stand-by. Instead, they just assume everyone who is long ITM at expiration wants to exercise. For 99.9999% of all traders this is absolutely the case.

Realistically if you don't have the money to exercise a long ITM option at expiration, and you don't have the ability to close the trade out before expiration day, perhaps you shouldn't be trading options.

 

[JesseJamesFinn1]

How many people have you met that blamed the Market or Maker Makers on every bad trade made? The Market Makers and Naked Shorts are keeping this trader away from their true potential!

 

[Randy888]

"Must you exercise an expiring in-the-money equity option?
An investor with an expiring long equity call or put position that is subject to automatic exercise does not have to exercise the contract. Instructions may be given through a brokerage firm to OCC not to exercise a call or put that is in-the-money by any amount."

so if the call option is out of the money.. And after 1h it goes into the money.. It gets also executed immediately..

 

[Randy888]

How many people have you met that blamed the Market or Maker Makers on every bad trade made? The Market Makers and Naked Shorts are keeping this trader away from their true potential!

not sure what you mean, but i'll take that you have to be both long & short.. & faster than algorithmic trading.

 

[JesseJamesFinn1]

not sure what you mean, but i'll take that you have to be both long & short.. & faster than algorithmic trading.[/QUOT


Randy I must be losing my eye sight or reading a different thread. My post was geared at someone who was accusing the Market Makers pinning their stock option. They get way too much credit!

 

[Randy888]

Hanlon's Razor is a good answer to this. A trait of new traders is to blame everyone but themselves for their losses. I just thought it was funny how what you wrote was the kind of thing you see in all sorts of trader psychology books.



First statement tells me you're the new wall street star. Second statement tells me I insulted your intelligence by suggesting you read before losing your money in the markets. I wont even address this further. I think it speaks for itself.



This is pure conspiracy theory. The rule enforcement comes from the CBOE and the OCC. Your particular broker may nefariously exercise your options but good brokers don't.

Let's use another razor, this time instead of Hanlon's Razor let's apply Occam's Razor. The simplest explanation is often the correct one - so here it is.

You're a trader and you left for your dream vacation on some remote carribean island for a week. The third friday of the month comes around, and you're deep ITM on some AMD. You come back and realize you never exercised your option! Worse yet, AMD just took it's brief rally to the stars. You're upset, you call your broker and scream at them "WHY DIDNT YOU JUST EXERCISE MY OPTION". You're out your money from all those gains you could've had and you had fully intended to exercise. How frustrating.

Your solution would require even more expensive commissions. Why? In order to execute your solution the broker would need to know the intention of every trader holding options with them. You practically need a broker on stand-by. Instead, they just assume everyone who is long ITM at expiration wants to exercise. For 99.9999% of all traders this is absolutely the case.

Realistically if you don't have the money to exercise a long ITM option at expiration, and you don't have the ability to close the trade out before expiration day, perhaps you shouldn't be trading options.

I hear what you are saying and I do so appreciate an individual whose character has been irreversibly harmed by intelligence.
So why not to have a single checkbox: "exercise my option automatically"?
And in case of your "professional" trader who spends 3 weeks in vacation YOLO style and then the broker "saves" his investment by exercising it automatically is saved. Broker such a nice guy.

The fact remains that the market was manipulated and yes I should have reacted differently.

So say you have a number of long options which close today and some that don't.
Stock is rising, so need to exercise it before the autoclose.

Then 1:59PM WJS dumps a fake news article and drops the price by say 20%(yes in 1 minute stock drops 20%). (options go down more %)
And in that 1 min, you have to notice this article, close your position and open a put option.. or u take 50% loss.

what would you do Gaussian? Not what could you do? but what would you do in that moment.

 

[Randy888]

I'm not blaming the market, market is my friend. I'm blaming WSJ sell of journalist who for 100k will write anything your heart desires.

 

[gaussian]

I hear what you are saying and I do so appreciate an individual whose character has been irreversibly harmed by intelligence.
So why not to have a single checkbox: "exercise my option automatically"?

No reason. A broker could support it. Why would they pay developers to do this when the likelihood is a person who doesn't want to exercise an ITM long option is super rare. That person can call/email/chat a support representative and do that, or they could be responsible and close their position before expiration. God forbid a broker expect people trading leveraged products be responsible.

what would you do Gaussian? Not what could you do? but what would you do in that moment.

What underlying is this? I usually trade volatility. When I trade directionally I use a stop loss. When I enter a trade I always know when and where I am going to get out. I speculate, I dont gamble.

I'm blaming WSJ sell of journalist who for 100k will write anything your heart desires.

It's weird how given you've only been trading options for a week you're blaming "fake news" instead of your relative inexperience in the market. Why couldn't it be that your analysis was wrong and the trade turned against you?

Look, I've been on the bad side of a trade before. It sucks. Its a terrible feeling watching your money evaporate. Learn from the experience. Don't sit here looking for excuses like "fake news" as the reason your one stock got creamed. That shouldn't matter. Proper risk management is key. You just paid tuition to learn some of it.

 

[JSOP]

I'm extremely unsatisfied with these rules. Ok say ur in the money/out if the money who cares.. if you dont have enouhh $$ to exercise, the let the option to expire.. why the hell to force close it if you could exercise it 1h later and still have 1h to got before trading day close. This is just for silly benefit of the trader.

because the option council, the governing body of options (the people that make all the rules about options) has a rule that automatically exercises options as long as they are 1 cent in the money and all the brokers have to obey this rule. So unless you specify to the brokers that you do NOT want to exercise, once your option becomes ITM, they are going to get exercised, so if you don't have enough $$, then you get a margin call, that's why you positions got closed.

Next time, when you don't want options to be exercised, tell the broker beforehand!!