IB auto-liquidation

Some people like IB's policy on auto-liquidation, but I think it's disgusting and not worth the risk of getting screwed by it. I guess it's a relatively cheap lesson for you to learn, but what happened to you was exactly what happened during the flash crash. This means IB is not and will not change how their auto-liquidation works.

Basically have 3 choices. Continue with IB but with less leverage to mitigate the liquidation risk, trade the same and accept that risk, or find a new broker that uses an actual person for liquidations.
 
Benihana said:
Some people like IB's policy on auto-liquidation, but I think it's disgusting and not worth the risk of getting screwed by it. I guess it's a relatively cheap lesson for you to learn, but what happened to you was exactly what happened during the flash crash. This means IB is not and will not change how their auto-liquidation works.

Basically have 3 choices. Continue with IB but with less leverage to mitigate the liquidation risk, trade the same and accept that risk, or find a new broker that uses an actual person for liquidations.
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yes, they have been sued for doing it in the past

http://www.reuters.com/article/us-arbitration-interactive-auto-liquidat-idUSKBN0LM23620150218


https://www.levinlaw.com/news/were-your-life-savings-auto-liquidated-your-broker
 
I would be interested in knowing whether they filled the order as a spread or a separate order on each leg. Can you check time and sales and see?
 
Appears to be simultaneous separate legs.
Capture.PNG
 
atrp2biz said:
Appears to be simultaneous separate legs.
View attachment 173985
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So it was filled as two separate orders not as a spread (from two exchanges)

If it was entered as a spread, the fill price would have been much better. Seems very unreasonable that IB's program couldn't have entered the order as a spread.
 
Doubtful the spread market would have been much better with 5 minutes to the close on a 1 lot.
They needed to exit and they closed at the natural. I don't see any harm or foul here. Plus why didn't you close ? Gaming the last five minutes ?
Had they reached out to you during the day to alert you ?
 
I didn't close earlier in the day because both sides were ITM with AMZN trading >$967 most of the day and was away from my computer. I was expecting the legs to be exercised/assigned as had been the case many times before. Another thing they could have done was to force exercise my long leg.

Did they reach out to me? You mean--a human? LOL.
 
Both legs ITM - what was rhe spread ? That's all that counts. I didn't say anything about a human. Did they make you aware of the expiration issue at any point after Wednesday ? No point in making a call when customers don't answer. It's one of the oldest ploys in the option industry.

They did exact;y what they needed to do. Being away from your computer with a spread with both side ITM doesn't relieve you of any responsibility - especially at expiration. People always "hide" at expiration - that's why every brokerage house has a set of rules.
 
What am I hiding from?

I expected to be assigned and exercised in the worst case scenario. In a better scenario, I close the spread for anything less than $30 which I intended to do going into the close.

I have zero issue with the act of the liquidation itself. I just would have thought it could have been filled for $30 or better. A limit order of $30.01 would have been picked off instantly. No?
 
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