Margin Call on an IB IRA account (Need Suggestions)

D

developer17

Folks,

I had 16 Contracts (GOOG) (call options - strike 280) in my IRA account at IB. Last week at 4 PM, Google was still under 280 and was not able to sell the options since the bid was nil. Since GOOG was under 280, I just let the options expire.

But since GOOG moved to 280.30 a little later after the close, my options were automatically exercised by the Options clearing authority. I had just a balance of over $800.00 in my account

On Monday, IB liquidated GOOG at the open for a net loss of around $10,000. Now IB wants me to deposit $9200.00 in my account to settle the negative balance.

I assumed that since IRA's are cash accounts, I would never have to deal with a margin call. But now I am in serious trouble. Lastly, I cannot contribute $9000.00 to an IRA in any given year. It is well past the maximum allowed.

Please advise ...

thanks
 
Quote from developer17:

Folks,

I had 16 Contracts (GOOG) (call options - strike 280) in my IRA account at IB. Last week at 4 PM, Google was still under 280 and was not able to sell the options since the bid was nil. Since GOOG was under 280, I just let the options expire.

But since GOOG moved to 280.30 a little later after the close, my options were automatically exercised by the Options clearing authority. I had just a balance of over $800.00 in my account

On Monday, IB liquidated GOOG at the open for a net loss of around $10,000. Now IB wants me to deposit $9200.00 in my account to settle the negative balance.

I assumed that since IRA's are cash accounts, I would never have to deal with a margin call. But now I am in serious trouble. Lastly, I cannot contribute $9000.00 to an IRA in any given year. It is well past the maximum allowed.

Please advise ...

thanks
More...
Since when can you trade options besides covered calls in an IRA. If thats the case the broker should not of allowed you to enter that trade in the first place and should be held accountable
 
Quote from Truff:

Since when can you trade options besides covered calls in an IRA. If thats the case the broker should not of allowed you to enter that trade in the first place and should be held accountable
More...

If you enter a self directed IRA, you can trade all sorts of products and strategies. Can even trade futures, various options spreads, etc, etc.
 
Quote from developer17:

Folks,

I had 16 Contracts (GOOG) (call options - strike 280) in my IRA account at IB. Last week at 4 PM, Google was still under 280 and was not able to sell the options since the bid was nil. Since GOOG was under 280, I just let the options expire.

But since GOOG moved to 280.30 a little later after the close, my options were automatically exercised by the Options clearing authority. I had just a balance of over $800.00 in my account

On Monday, IB liquidated GOOG at the open for a net loss of around $10,000. Now IB wants me to deposit $9200.00 in my account to settle the negative balance.

I assumed that since IRA's are cash accounts, I would never have to deal with a margin call. But now I am in serious trouble. Lastly, I cannot contribute $9000.00 to an IRA in any given year. It is well past the maximum allowed.

Please advise ...

thanks
More...

Since IB traded your account, let them pick up the tab.
 
Quote from Htrader:

With such a large amount involved, I recommend you speak to a securities lawyer.

http://www.greencompany.com/


Any "advice" you receive on these boards will most likely be incorrect.
More...

i agree you need to talk to green.he will give you a consultation for a small amount. let us know the answer. that is one i have never run across before.
 
Assuming you are unfamiliar with Green, he is a CPA specializing in trader's taxes. He expanded a few years back to add some attorneys under his company umbrella. Green himself is easy to talk to. He used to charge about $200/250/hr in quarter hour increments.
 
Quote from vulture:

If you enter a self directed IRA, you can trade all sorts of products and strategies. Can even trade futures, various options spreads, etc, etc.
More...
Didn't know that. i knew you can trade futures but not options. Thats screwed up
 
That is a incredibly ugly story...

Just to be sure, I'd check to make sure it was the clearing house that exercised your options. There was another story posted here about IB claiming NASDAQ busted a trade when in fact it was IB that --wrongly -- did so.

Unfortunately, IB states the following:

The OCC must receive contrary intentions through the Option Exercise window for:

* stock options that are in the money by $.25 OR LESS and need to be exercised
* stock options that are out of the money but need to be exercised
* index options that are out of the money but need to be exercised
* stock options that are in the money by more than $.25 but DON'T need to be exercised
*index options that are in the money by more than $.01 but DON'T need to be exercised

Here is the link:

http://www.interactivebrokers.com/php/webhelp/Screens/optionexercise.htm

I'm afraid you may have trouble on this one.
 
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