Margin Call on an IB IRA account (Need Suggestions)

Quote from Truff:

Didn't know that. i knew you can trade futures but not options. Thats screwed up
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yeah, its a relatively recent development. For instance, I copied this from the ThinkorSwim.com website regarding permitted strategies allowed in a self directed IRA:

Permitted positions are:
Long stock (must be paid for in full with cash)
Long calls and puts
Short puts with cash equal to the value of the strike price
Short calls against long stock
Selling a PUT calendar spread
Long and short verticals, butterflies, condors, and long calendar spreads

https://www.thinkorswim.com/tos/displayFaq.wbt
 
check out the nasd website..the only option strategy allowed in ira's are covered calls..due to situatuions like the one your in now..there was a similiar situation at schwab a few years ago..a dr. lost over 1mm doing the same..he sued schwab..they should not have let him trade such options..he won every penny back..good luck
 
Quote from trade24:

check out the nasd website..the only option strategy allowed in ira's are covered calls..due to situatuions like the one your in now..there was a similiar situation at schwab a few years ago..a dr. lost over 1mm doing the same..he sued schwab..they should not have let him trade such options..he won every penny back..good luck
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Actually, I believe that is why IB, ThinkorSwim, etc, etc, require individuals who want to trade futures, options spreads, option outrights, etc, to first open up an IRA Trust and the Trust Co. acts as the custodian.
 
Quote from trade24:

check out the nasd website..the only option strategy allowed in ira's are covered calls..due to situatuions like the one your in now..there was a similiar situation at schwab a few years ago..a dr. lost over 1mm doing the same..he sued schwab..they should not have let him trade such options..he won every penny back..good luck
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Not true...lots of firms will let you trade any option strategy not requiring margin, like long straddles, long calls, long puts, etc.

That example you give of some "dr." is what's wrong with the brokerage business today...it's like walking into a casino, dropping 1 million on the craps table, and suing when you lose. Ridiculous, but quite common. The attitude is , hey, if I'm right, I'll win. If I lose, I'll sue.

Speaking of suing, the thread started should see a lawyer.
 
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.
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I guess I'm missing something here...

Isn't the settling price as of the close on Friday?

When OCC (if that's who actually did it) liquidated the option and passed $800 to your account, wasn't the trade CLOSED at that time?

How can IB use -Monday's- price for liquidation ??? :confused:

If they can do that, can they use Tuesday's price if they choose to? Next month's price? What the heck's up with that?

I always thought it was Friday at the close of regular trading...
 
Quote from d9d:

I guess I'm missing something here...

Isn't the settling price as of the close on Friday?

When OCC (if that's who actually did it) liquidated the option and passed $800 to your account, wasn't the trade CLOSED at that time?

How can IB use -Monday's- price for liquidation ??? :confused:

If they can do that, can they use Tuesday's price if they choose to? Next month's price? What the heck's up with that?

I always thought it was Friday at the close of regular trading...
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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.


it looks to me like he was assigned at 280 but since he didnt have the money in his account to pay for the Google he was liquidated at the open monday. google opened around 276 monday so there is your loss.
 
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...
More...
Good gawd! What a horror story! I've only been trading ops since '99, but I haven't heard one that bad from long options.

Something isn't right. Auto-exercise or not (yeah, I know - you entered into a contract with the OCC when you bot them, but still this doesn't seem right), from the Long side you have the Right Not the Obligation to purchase shares at the strike. For gosh sakes, that was almost half a million worth of GOOG IB let you "buy" with $800, just so you could get bent over!

Something's f*cked up...

Good luck with this and please keep us all posted.

C
 
Quote from Choad:

Good gawd! What a horror story! I've only been trading ops since '99, but I haven't heard one that bad from long options.

Something isn't right. Auto-exercise or not (yeah, I know - you entered into a contract with the OCC when you bot them, but still this doesn't seem right), from the Long side you have the Right Not the Obligation to purchase shares at the strike. For gosh sakes, that was almost half a million worth of GOOG IB let you "buy" with $800, just so you could get bent over!

Something's f*cked up...

Good luck with this and please keep us all posted.

C
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i wonder if he had told them not to exersize if he would have been ok. i realize he probably never knew the price closed above the strike until monday but he should have. i show the close at 280.30
it is a little known fact that you have until saturday to exersize an option. most retail cant do it but big players can.
 
vehn, thanks for the post.

that makes some sense....-some- sense... :D

I was under the impression that the default was to net for -cash-....and in fact, it sounds like that's what happened -first-.

I.e., they put the net cash of 800 into his acct saturday.

but from what you describe, it sounds like the default is to assign -shares- !!

that's kinda weird...

is there some way to set a 'default' with IB for your account so that options are ALWAYS netted for CASH on expiration..i.e. you are NEVER assigned shares?

If so, I would certainly like to get that set on MY account... :D
 
the more I think about it, the more I'm wondering what happened on -Saturday-.

how did the 800 get into his account ?

It seems the option must have exercised AND the stock sold by IB, in order to net ANY cash into his account.

So if it was technically liquidated Saturday in order to produce that 800; then why wasn't the trade 'closed' then ?


huh....it just occurred to me to wonder how many -other- people this happened to... :p

musta been a lotta goog-280's hanging in the breeze on friday... :D
 
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