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Margin Call on an IB IRA account (Need Suggestions)
- Thread starter developer17
- Start date
The OP claims he couldn't sell his GOOG 280 calls because of zero on the bid but this ET'r sold his 20 contracts of GOOG 280 calls for $0.15 at 3:53pm.
http://www.elitetrader.com/vb/showthread.php?s=&postid=771371#post771371
http://www.elitetrader.com/vb/showthread.php?s=&postid=771371#post771371
Quote from ammo:
even though its done all the time ,the option should be marked to the 4pm est stock close on the nose price which was 280 and his option is worthless ,any price after that is after hours trading and since the option is closed it cant be marked to an after hours stock price worth .30 and he should not have been assigned ...after hours trading is an add on that did not include after hours option trading..if a buyout rumor came out and the stock rallied to 310 at 1 minute after expiration do you think they would have said your option has expired worthless,they should, and what would they tell the guy with the 290 calls.. .this may be a loophole but it sounds black and white ,not a grey area,its worth asking an attorney about..before after hours trading ,trading after the close was illegal and any crosses to clean things up were done at the closing price
I know the thread is 7 years old and this comment was posted about 1 month ago, but just for reference and to stop this line of attack, the official close of Google at 4:00PM that exp day was 280.30. No after hours funny games were involved at all.
Quote from blueplayer:
I know the thread is 7 years old and this comment was posted about 1 month ago, but just for reference and to stop this line of attack, the official close of Google at 4:00PM that exp day was 280.30. No after hours funny games were involved at all.
the OP should know the rules and inform the firm not to exercise. automatic exercise is based upon the closing price at 4pm. suppose there was a bullish event after 4pm can the holder of the call withdraw his do not exercise notice?
Quote from tomcole:
YIPES!!!!!!!!!!!!!
Thats a helluva story.
If they moved money from a regular a/c to a IRA a/c, AT WILL & WITHOUT YOUR PERMISSION, that has to be one wild tax question for you.
Is there a legal precednce for this or an IRS opinion? I'd love to see it.
If you're already maxed out how much you can put into IRA type a/cs and move yet even more, whos responsible? Did they move capital, trading profts or what?
You need a lawyer my friend, this is a growing nightmare.
who said they moved the money into the ira account.maybe they took it out of the regular account and transferred it to ib's account.
I remember having received an email from IB lately addressing this problem - they will now deny exercize of options that might result in a margin deficit:
http://ibkb.interactivebrokers.com/node/1767
IB reserves the right to prohibit the exercise of stock options and/or close short options if the effect of the exercise/assignment would be to place the account in or near margin deficit. While the purchase of an option generally requires no margin since the position is paid in full, once exercised the account holder is obligated to either pay for the ensuing long stock position in full (in the case of a call exercised in a cash account or stock subject to 100% margin) or finance the long/short stock position (in the case of a call/put exercised in a margin account)._ Accounts which do not have sufficient equity on hand prior to exercise introduce undue risk should an adverse price change in the underlying occur upon delivery. This uncollateralized risk can be especially pronounced and may far exceed any in-the-money value the long option may have held, particularly at expiration when clearinghouses automatically exercise options at in-the-money levels as low as $0.01 per share.
Take, for example, an account whose equity on Day 1 consists solely of 20 long $50 strike call options in hypothetical stock XYZ which have closed at expiration at $1 per contract with the underlying at $51. Assume under Scenario 1 that the options are all auto-exercised and XYZ opens at $51 on Day 2. Assume under Scenario 2 that the options are all auto-exercised and XYZ opens at $48 on Day 2.
http://ibkb.interactivebrokers.com/node/1767
IB reserves the right to prohibit the exercise of stock options and/or close short options if the effect of the exercise/assignment would be to place the account in or near margin deficit. While the purchase of an option generally requires no margin since the position is paid in full, once exercised the account holder is obligated to either pay for the ensuing long stock position in full (in the case of a call exercised in a cash account or stock subject to 100% margin) or finance the long/short stock position (in the case of a call/put exercised in a margin account)._ Accounts which do not have sufficient equity on hand prior to exercise introduce undue risk should an adverse price change in the underlying occur upon delivery. This uncollateralized risk can be especially pronounced and may far exceed any in-the-money value the long option may have held, particularly at expiration when clearinghouses automatically exercise options at in-the-money levels as low as $0.01 per share.
Take, for example, an account whose equity on Day 1 consists solely of 20 long $50 strike call options in hypothetical stock XYZ which have closed at expiration at $1 per contract with the underlying at $51. Assume under Scenario 1 that the options are all auto-exercised and XYZ opens at $51 on Day 2. Assume under Scenario 2 that the options are all auto-exercised and XYZ opens at $48 on Day 2.
I remember having received an email from IB lately addressing this problem - they will now deny exercize of options that might result in a margin deficit:
http://ibkb.interactivebrokers.com/node/1767
IB reserves the right to prohibit the exercise of stock options and/or close short options if the effect of the exercise/assignment would be to place the account in or near margin deficit. While the purchase of an option generally requires no margin since the position is paid in full, once exercised the account holder is obligated to either pay for the ensuing long stock position in full (in the case of a call exercised in a cash account or stock subject to 100% margin) or finance the long/short stock position (in the case of a call/put exercised in a margin account)._ Accounts which do not have sufficient equity on hand prior to exercise introduce undue risk should an adverse price change in the underlying occur upon delivery. This uncollateralized risk can be especially pronounced and may far exceed any in-the-money value the long option may have held, particularly at expiration when clearinghouses automatically exercise options at in-the-money levels as low as $0.01 per share.
Take, for example, an account whose equity on Day 1 consists solely of 20 long $50 strike call options in hypothetical stock XYZ which have closed at expiration at $1 per contract with the underlying at $51. Assume under Scenario 1 that the options are all auto-exercised and XYZ opens at $51 on Day 2. Assume under Scenario 2 that the options are all auto-exercised and XYZ opens at $48 on Day 2.
any changes on how this is handled? what is the settlement price on fri for an option, close or 15 minutes after?