ib option immediate exercise

A related question: is the transaction cost of an exercise equal to the commission of buying or selling the corresponding number of the underlying? E.g., if you exercise or are exercised one call, is the commission equal to that of buying or selling 100 shares? My understanding is that exercise or being exercised entails greater transaction cost.

Thanks for any input.


Quote from stock777:

If you do an immediate exercise on a call, does the long stock show up for trading in the account right away?
More...
 
Quote from TimeCorrosion:

A related question: is the transaction cost of an exercise equal to the commission of buying or selling the corresponding number of the underlying? E.g., if you exercise or are exercised one call, is the commission equal to that of buying or selling 100 shares? My understanding is that exercise or being exercised entails greater transaction cost.
More...
These questions are so easy to answer just by looking at your broker's web site.

IB says:
"Note: Commissions are not charged for US and Asia exercise and assignment."
http://www.interactivebrokers.com/en/accounts/fees/commissionStockIndexOptions.php?ib_entity=llc
 
Quote from TimeCorrosion:

A related question: is the transaction cost of an exercise equal to the commission of buying or selling the corresponding number of the underlying? E.g., if you exercise or are exercised one call, is the commission equal to that of buying or selling 100 shares? My understanding is that exercise or being exercised entails greater transaction cost.

Thanks for any input.
More...
if you are asking about commission, you can look that up and do a quick calculation yourself.

if you are asking about transaction cost, which includes the premium you paid for acquiring those options, then the answer is yes, it will most likely cost more than buying the shares directly.
 
Thank you for your reply. But the fact that IB does not charge commission on exercise is what I don't understand. Why would IB do free labor? They charge me to cancel a transmitted but unexecuted order, why don't they charge exercise? What is in it for them?



Quote from FullyArticulate:

These questions are so easy to answer just by looking at your broker's web site.

IB says:
"Note: Commissions are not charged for US and Asia exercise and assignment."
http://www.interactivebrokers.com/en/accounts/fees/commissionStockIndexOptions.php?ib_entity=llc
More...
 
Quote from TimeCorrosion:

They charge me to cancel a transmitted but unexecuted order, why don't they charge exercise? What is in it for them?
More...
They don't charge you the canceled order fee, the exchange does.

As for why they do free exercises, I'm guessing the amount of additional labor is virtually zero. They likely submit an electronic notification to OCC (which happens completely automatically) and the shares appear the next day.

Still, I've not dug too deeply because I like the service being free. :-)
 
You must log in or register to reply here.
Back
Top