Option contract expired but not enough margin capital

[tkminh85]

Hi all,

I'm newbie, and I face this case, please suggest me a way to solve this.
I have Bull spread DIS option, expire 17 Dec:
Sell Put 150
Buy Put 145

But DIS 's now 148, and it's auto exercised, but I don't have enough margin and fund.
Here is the msg I received:
This is to inform you that Interactive Brokers has liquidated certain option positions in your account xxxxx as the current level of equity is insufficient to support the projected margin requirement were these expiring options to be exercised/assigned.

What should I do now ? I don't want to own stock.
Can I Buy Put next week and excersiced after that ?


Have a nice day !

 

[BlueWaterSailor]

What should I do now ? I don't want to own stock.
Can I Buy Put next week and excersiced after that ?

Since IB mentions liquidating your positions rather than you being assigned, it simply means that they closed your position before expiration (usually about 15 minutes before the bell.) Your total risk was the 5-point spread width less the credit you received; whatever they closed you out for would be close to that number. You're down a couple of hundred bucks per lot at most, with no need to worry about assignment.

 

[tkminh85]

Since IB mentions liquidating your positions rather than you being assigned, it simply means that they closed your position before expiration (usually about 15 minutes before the bell.) Your total risk was the 5-point spread width less the credit you received; whatever they closed you out for would be close to that number. You're down a couple of hundred bucks per lot at most, with no need to worry about assignment.

Oh, thank you for your help. So i no need to worry about assignment. Nice day !

 

[BlueWaterSailor]

Oh, thank you for your help. So i no need to worry about assignment. Nice day !

In the future, I suggest you close your trades rather than letting them expire if there's any chance of them ending up ITM - and that includes ones that are OTM but close, especially in volatile stocks. In this case, your broker took care of it for you - but there's been a number of instances where someone left their trades open and got assigned against the short after expiration, past the time when they could exercise their long (and their broker failed to do so for them.)

 

[Overnight]

In the future...

Whenever I see BWS type the word "future", I get nervous. Is he coming into our sacred future space? He's going to muck with the whole futures world. Will Robinson had nothing to worry about compared to this new threat. Buggahs!

 

[BlueWaterSailor]

Whenever I see BWS type the word "future", I get nervous. Is he coming into our sacred future space? He's going to muck with the whole futures world. Will Robinson had nothing to worry about compared to this new threat. Buggahs!

Yeah, I'll snake the whole asset class out from under you before you know it, and leave you nothing to trade. THEN you'll be sorry.

(Reminds me of a line in one of Terry Pratchett's books - "Maskerade", I think - where a woman who is trying to convey how rich she is tells a banker that she's looking for another bank because she keeps filling up the ones she has.)

 

[Overnight]

Yeah, I'll snake the whole asset class out from under you before you know it, and leave you nothing to trade. THEN you'll be sorry...

At that point I'll be knocking on your door dressed as a tramp, and asking if you have (no, not if you have a dime to spare, but) a trading idea.

 

[JSOP]

Hi all,

I'm newbie, and I face this case, please suggest me a way to solve this.
I have Bull spread DIS option, expire 17 Dec:
Sell Put 150
Buy Put 145

But DIS 's now 148, and it's auto exercised, but I don't have enough margin and fund.
Here is the msg I received:
This is to inform you that Interactive Brokers has liquidated certain option positions in your account xxxxx as the current level of equity is insufficient to support the projected margin requirement were these expiring options to be exercised/assigned.

What should I do now ? I don't want to own stock.
Can I Buy Put next week and excersiced after that ?


Have a nice day !

What that message of IB said was it has already bought back some of your short put positions so you won't have to worry about those puts being exercised against you and you have now adequate funds to buy the stock from being assigned on the rest of the short put positions that are left, if any. You will have no choice. You will have to own some stocks from the auto-exercise if IB didn't buy back all of your short put positions. Whether you want to buy put against these stocks will depend on what you think will happen to the stock. Whether the puts that you buy will be exercised will depend on what happens to the stock in the future.