Your not alone in your thinking. If you do some Google searches there are quite a few papers that have studied the tendency of prices to be at or near a strike price dead on. Of course most strike prices are whole numbers so that could be part of it also. But it surely makes sense for someone that is near money on a large amount of naked options to want to push the stock around
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Interactive Brokers would not allow me to exercise
- Thread starter Robert Weinstein
- Start date
Your not alone in your thinking. If you do some Google searches there are quite a few papers that have studied the tendency of prices to be at or near a strike price dead on. Of course most strike prices are whole numbers so that could be part of it also. But it surely makes sense for someone that is near money on a large amount of naked options to want to push the stock around
Quote from def:
Stocks settle T+2 but this does not mean you can buy at stock after T date and have it settle on T+2. Ditto for options, just because they "officially" settle on the Saturday after expiration doesn't mean you have the right to exercise them until then. The official cut-off time is 5:30 PM. However, brokers need to process client instructions and pass them the clearing house before their deadline. There is nothing nefarious going on here. Outside of the auto-exercise options, there might be thousands of additional exercise or lapses instructions that need to be processed. A buffer needs to be built in to process and confirm receipt of the instructions. IB's procedures are in line with industry practice.
Lame as hell. GS allows me to exercise up to the 5:30 cutoff.
Run from these jokers.
Quote from indahook:
Lame as hell. GS allows me to exercise up to the 5:30 cutoff.
Run from these jokers.
The more I am learning the more I agree that your right about the lame part. Seriously, is IB needing more than 1 second buffer to process and cofirm receipt of the instructions? How can any order be as quick as they are with IB if anyone other than a computer is doing the confirming and processing?
Is not a manual exercise at 3:29P CT next to instant? (I recall executing a manual exercise before and about the time my finger left the button it appeared to be a done deal. what changes at 3:31P CT?
I could buy "It is our policy and we don't want to change because bla bla bla" a whole lot easier than "we need a buffer". Those of us that have used IB for years know its IBs way or the highway and we accept that for the low prices.
Def, It would be great if IB did take a look at this and made an adjustment.
Quote from Jerkstore:
Once upon a time, customers had longer to exercise their options than MM's. Now, the rules of when to exercise an option are the same for every market participant. No one knows what they were assigned on until after processing on Saturday, but the notices have to be in by 4:30 central.
GOOG is always an interesting study. I am convinced that some large company forceably pins the stock when they can. This allows them to collect a large amount of decay on the pinned strike, and buy back everything at 2:55 on Friday. However, this group would be left with a large delta position as they force the stock up/down a few $$. To make up for this, the company will overbuy the pinned strike at 2:55, and exercise options to flatten out their delta position.
If you are short options on that line in GOOG you will often get assigned options that technically close OTM.
There's an academic paper somewhere that says that the strike prices act as magnets on expiration due to delta hedging by market participants.
Quote from Robert Weinstein:
Order cancellation fees are the only rule that would favor the MM's. - I am sorry but I can not agree with that, others are not able to bid and offer at the same time. This is maybe the biggest disadvantage as it keeps the spreads wider and lowers flexibility for traders. This is a VERY big deal and costs everyone else huge amounts of money especially when taking a stop loss and you have to get out. Sorry but I have looked at option pricing and NO most are not penny spreads. Even the ones that can trade in penny spreads are often not because of lack of liquidity which again is because of the limitation on who can bid/offer at the same time
Additionally, MM's have to pay .65 per contract for payment for order flow to customer designated orders (which is what YOU are). - here is the Fee schedule for the CBOE but I don't see how it adds up to that amount. Your number doesn't really pass the smell test either as IB charges a lot less for volume traders. http://www.cboe.com/publish/feeschedule/CBOEFeeSchedule.pdf
There is no way for a MM to make money on anything less than a 3 penny wide market - who cares?? so they cant make money with SPY and C. Sorry but the specialist is gone in NYSE and costs for everyone else went down big time(I am pretty sure I am not the only one who has been screwed by the specialist more than once). The pits in CHI are dying also. good riddance as they increase the transaction costs for everyone else compared to computers. This is not a welfare work program this is the free market and there are a lot of other countries that would love to have the markets we have and if we don't evolve we will miss out and that means everyone misses out.
I dunno what you do in this biz but for me I am sick of being a second class citizen in the market place that has to try to compete in an unlevel playing field. Let the free market do its magic, it works pretty well in my opinion
payment for order flow is something totally different. that is what they pay to the brokerage firms for sending them orders.
you can bid & offer at the same time, just get yourself a seat on the CBOE.
if you dislike the b/a spreads now, what do you think they would look like without MM's?
in the free market, why is it unacceptable for you that IB sets their own policies?
really don't you only have yourself to blame for all this for not knowing IB's rules ahead of time? Did you not read the paperwork that you signed and know what you agreed to when you opened your account with them? From what I can see they don't exactly hide their rules...
Quote from johnnyc:
payment for order flow is something totally different. that is what they pay to the brokerage firms for sending them orders.
you can bid & offer at the same time, just get yourself a seat on the CBOE.
if you dislike the b/a spreads now, what do you think they would look like without MM's?
in the free market, why is it unacceptable for you that IB sets their own policies?
really don't you only have yourself to blame for all this for not knowing IB's rules ahead of time? Did you not read the paperwork that you signed and know what you agreed to when you opened your account with them? From what I can see they don't exactly hide their rules...
payment for order flow is something totally different. - Yes you are technically correct I used the wrong term. I meant to say what the CBOE charges before discounts to MMs. Sorry I was not clear
you can bid & offer at the same time, just get yourself a seat on the CBOE.- Yes but that makes my point. It is not a level playing field and there is no justification for it beyond keeping MMs at an advantage over other market participants.
if you dislike the b/a spreads now, what do you think they would look like without MM's? - In todays age of technology and with the costs of transactions as low as they are now I think its pretty obvious the spreads would narrow just as they have done with stocks and futures that trade electronically If others are allowed to enter bids and offers at the same time. MMs have not gone away from stocks and futures but the excess MMs that are not needed have gone away. This is a good sign as it means the markets are reaching a point of efficiency and even price discovery.
in the free market, why is it unacceptable for you that IB sets their own policies? - Its not in my opinion any more than it is for me to leave IB to go do another company. By making this post I am doing IB a favor. (for those that can't figure that out, I am letting IB know what services I want and trying to see if IB will adjust. To just simply leave without letting them know why means they only know they lost a customer(s) but not what they can do to keep/get customers)
really don't you only have yourself to blame for all this for not knowing IB's rules ahead of time? - These are the types of questions made by people that jump in without reading all the posts. This was addressed before so don't you think you only have yourself to blame for not knowing the answer for not knowing the posts ahead of time to making your post? (I will give you a hint, I read and knew the rules ahead of time. If you want to know the rest maybe you will do the same with the posts in the thread)
Quote from Robert Weinstein:
payment for order flow is something totally different. - Yes you are technically correct I used the wrong term. I meant to say what the CBOE charges before discounts to MMs. Sorry I was not clear
you can bid & offer at the same time, just get yourself a seat on the CBOE.- Yes but that makes my point. It is not a level playing field and there is no justification for it beyond keeping MMs at an advantage over other market participants.
if you dislike the b/a spreads now, what do you think they would look like without MM's? - In todays age of technology and with the costs of transactions as low as they are now I think its pretty obvious the spreads would narrow just as they have done with stocks and futures that trade electronically If others are allowed to enter bids and offers at the same time. MMs have not gone away from stocks and futures but the excess MMs that are not needed have gone away. This is a good sign as it means the markets are reaching a point of efficiency and even price discovery.
in the free market, why is it unacceptable for you that IB sets their own policies? - Its not in my opinion any more than it is for me to leave IB to go do another company. By making this post I am doing IB a favor. (for those that can't figure that out, I am letting IB know what services I want and trying to see if IB will adjust. To just simply leave without letting them know why means they only know they lost a customer(s) but not what they can do to keep/get customers)
really don't you only have yourself to blame for all this for not knowing IB's rules ahead of time? - These are the types of questions made by people that jump in without reading all the posts. This was addressed before so don't you think you only have yourself to blame for not knowing the answer for not knowing the posts ahead of time to making your post? (I will give you a hint, I read and knew the rules ahead of time. If you want to know the rest maybe you will do the same with the posts in the thread)
I saw where you said IB has in the past made an exception to one of their rules, so you expected them to do it again. They didn't and you won't stop crying.
one of the reasons transaction costs are so low is because of the mm's. get rid of them and brokerage firms no longer get payment for order flow and your trading costs will increase. In addition, you would see wider spreads and much slower and worse executions because liquidity would dry up.
basically you want to be able to trade like a market maker but don't want to meet the requirements to do so. there are plenty of mm's for equities and futures trading also.
I've read most of your posts, and you never seem to stop whining and you feel that rules should not apply to you. That about sum it up?
Quote from johnnyc:
I saw where you said IB has in the past made an exception to one of their rules, so you expected them to do it again. They didn't and you won't stop crying.
one of the reasons transaction costs are so low is because of the mm's. get rid of them and brokerage firms no longer get payment for order flow and your trading costs will increase. In addition, you would see wider spreads and much slower and worse executions because liquidity would dry up.
basically you want to be able to trade like a market maker but don't want to meet the requirements to do so. there are plenty of mm's for equities and futures trading also.
I've read most of your posts, and you never seem to stop whining and you feel that rules should not apply to you. That about sum it up?
I saw where you said IB has in the past made an exception to one of their rules, so you expected them to do it again. They didn't and you won't stop crying.- If you read it why would you need to ask the same question again? didn't you understand it the first time? I guess maybe you need a little extra help and I will be happy to make it simple and break it down for you. I bought 2 contracts into the close as an experiment to see if the time limit was actual or incorrect. NO YOUR WRONG about IB they have not made an exception to ONE of their rules. They make mistakes often in my opinion based on my own experience and from others that have showed me what happened. The fact remains that most of the time when staff or the site of IB has been wrong it has gone in my favor. Did I EXPECT it to work? no but again based on past experiences I felt it was worth a chance to see if it was going to be one more time that IB actual practices did not match results. Crying? uhmm its two contracts for a total of about $20-40 (than than the commissions I pay to IB on any given day before lunch) so I don't think anyone has brought me a tissue but regardless of the amount it has me looking at others
one of the reasons transaction costs are so low is because of the mm's. get rid of them and brokerage firms no longer get payment for order flow and your trading costs will increase. In addition, you would see wider spreads and much slower and worse executions because liquidity would dry up. - you start out technically correct but for the wrong reason and then you totally fall off the face of reality. Yes MMs narrow the spread but so does everyone else adding liquidity. Again to make it real simple, ANYONE adding liquidity helps to narrow the spreads just like you see in any relative underlying stock.
basically you want to be able to trade like a market maker but don't want to meet the requirements to do so. there are plenty of mm's for equities and futures trading also. - I want the rules to be equal for all and let the marketplace pick the winners and losers. I believe the market works better than a central committee comrade.
I've read most of your posts, and you never seem to stop whining and you feel that rules should not apply to you. That about sum it up? - Pretty close, I don't feel the rules making it an unlevel playing field should apply to any of the other market participants. The fact is sooner or later it is going to happen anyway. The question is when and by whom. the OCC and or some of the exchanges may find that they are caught losing marketshare when another comes up to the bat and provides a better service. Same goes for IB. IB may find that customers that primarily buy options leaving as there are currently better offers out there.
What is your disclosure? who do you work for or what is your motivation in trying to keep the status of MMs being able to have an advantage over others? I am guessing your working at some level in the industry. If not and your like me on the outside looking in I would strongly suggest getting a lead paint exposure test done. Do you remember colored flat sweet tasting candy near the windows when you were a child???
Quote from Robert Weinstein:
I saw where you said IB has in the past made an exception to one of their rules, so you expected them to do it again. They didn't and you won't stop crying.- If you read it why would you need to ask the same question again? didn't you understand it the first time? I guess maybe you need a little extra help and I will be happy to make it simple and break it down for you. I bought 2 contracts into the close as an experiment to see if the time limit was actual or incorrect. NO YOUR WRONG about IB they have not made an exception to ONE of their rules. They make mistakes often in my opinion based on my own experience and from others that have showed me what happened. The fact remains that most of the time when staff or the site of IB has been wrong it has gone in my favor. Did I EXPECT it to work? no but again based on past experiences I felt it was worth a chance to see if it was going to be one more time that IB actual practices did not match results. Crying? uhmm its two contracts for a total of about $20-40 (than than the commissions I pay to IB on any given day before lunch) so I don't think anyone has brought me a tissue but regardless of the amount it has me looking at others
one of the reasons transaction costs are so low is because of the mm's. get rid of them and brokerage firms no longer get payment for order flow and your trading costs will increase. In addition, you would see wider spreads and much slower and worse executions because liquidity would dry up. - you start out technically correct but for the wrong reason and then you totally fall off the face of reality. Yes MMs narrow the spread but so does everyone else adding liquidity. Again to make it real simple, ANYONE adding liquidity helps to narrow the spreads just like you see in any relative underlying stock.
basically you want to be able to trade like a market maker but don't want to meet the requirements to do so. there are plenty of mm's for equities and futures trading also. - I want the rules to be equal for all and let the marketplace pick the winners and losers. I believe the market works better than a central committee comrade.
I've read most of your posts, and you never seem to stop whining and you feel that rules should not apply to you. That about sum it up? - Pretty close, I don't feel the rules making it an unlevel playing field should apply to any of the other market participants. The fact is sooner or later it is going to happen anyway. The question is when and by whom. the OCC and or some of the exchanges may find that they are caught losing marketshare when another comes up to the bat and provides a better service. Same goes for IB. IB may find that customers that primarily buy options leaving as there are currently better offers out there.
What is your disclosure? who do you work for or what is your motivation in trying to keep the status of MMs being able to have an advantage over others? I am guessing your working at some level in the industry. If not and your like me on the outside looking in I would strongly suggest getting a lead paint exposure test done. Do you remember colored flat sweet tasting candy near the windows when you were a child???
Dude, you are crying. If not then why spend so much time whining about something that you don't even understand. I mean weren't you the guy that didn't know all exercises and assignments went through the OCC? how's someone going to come along that takes market share away from the OCC? Why don't you check around and see what happens if a firm submits late exercise instructions to the OCC, When you find out, I'm sure you'll understand why IB and others cut it off early.
in this fantasy land that you live in where mm's will no longer exist, are you going to be on both sides for all option classes like mm's do? or are you just wanting to cherry pick a few here and there? I think we all know the answer to that, and that Mr. Clueless, is why liquidity would dry up if mm's did not exist. The clients that trade through the IB's of the world take liquidity at a much higher rate then they add to it.
I've never tried lead paint, what did it taste like?