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Option expired in the money without execution as stock suspended
- Thread starter liangcai
- Start date
Oh, this stock halt is every option sellers' dream (If you have sold short options for premium before the halt of course). Time decay with no price movement and no volatility, just time decay.
It might not be fair, but this is how the market operates, so guess for option buyers, halts might be a significant unforeseen risk.
It might not be fair, but this is how the market operates, so guess for option buyers, halts might be a significant unforeseen risk.
Oh, this stock halt is every option sellers' dream (If you have sold short options for premium before the halt of course). Time decay with no price movement and no volatility, just time decay.
It might not be fair, but this is how the market operates, so guess for option buyers, halts might be a significant unforeseen risk.
No. It’s the worst.
You have no control what your position will be and at what price you can unwind it at.
Stocks don’t halt for a few days and not have a significant volatility event that will dwarf the free theta earned over those days.
No. It’s the worst.
You have no control what your position will be and at what price you can unwind it at.
Agree, only if you are short long dated options where it's almost certain the stock will be back before they expire. For the free theta, you forfeit position control.
Stocks don’t halt for a few days and not have a significant volatility event that will dwarf the free theta earned over those days.
I agree that volatility is expected after a halt, which would hurt your short option position, but there is also the direction after the halt is over, which can work for you or against you.
This is an incorrection assumption( as in wet dream) that a a high commission broker would have acted any differently.but they are a discount broker and they did notify you.
Their was someone here not long ago talking about being stuck in a short position from a halted company. Sounded like a nightmare in borrow fees, you can be stuck for some time depending on what halt was for, especially if it gets delisted.
I think I’d be happy that IB didn’t exercise and would be weary if shorting junk that’s going to go bankrupt, delisted, etc.
I think I’d be happy that IB didn’t exercise and would be weary if shorting junk that’s going to go bankrupt, delisted, etc.
Why?I think I’d be happy that IB didn’t exercise and would be weary if shorting junk that’s going to go bankrupt, delisted, etc
That makes a lot of sense. Thanks for answering my questions. So what will be the worst case if someone has short position and the stock halts and never comes back?Ok, so you were long the put and it didn't get exercised.
The OCC cancelled the auto exercise rule here because the stock was halted. There is unique risk exercising options in a halted stock. If you exercise puts, you get short stock (if you aren't long already). Short stock in halted stock has potential problems. You may not be able to cover and may be stuck paying hard to borrow fees. With calls or puts, you could be in a situation where you can't get out after an exercise. So it makes sense the OCC did this.
So you ask, should IB have just exercised for you anyway? Absolutely not. This is a decision you would have to make with all the potential problems. You say they sent you an information memo about it that you didn't read, but wonder it they should have sent you more or called you? What they did seems reasonable. I'm sorry you lost money here, but its on you, not IB.
That makes me feel better. Thanks.Their was someone here not long ago talking about being stuck in a short position from a halted company. Sounded like a nightmare in borrow fees, you can be stuck for some time depending on what halt was for, especially if it gets delisted.
I think I’d be happy that IB didn’t exercise and would be weary if shorting junk that’s going to go bankrupt, delisted, etc.
Their was someone here not long ago talking about being stuck in a short position from a halted company. Sounded like a nightmare in borrow fees, you can be stuck for some time depending on what halt was for, especially if it gets delisted.
I think I’d be happy that IB didn’t exercise and would be weary if shorting junk that’s going to go bankrupt, delisted, etc.
It’s best to stay out of markets that are broken unless you have an informed or advantaged view about that broken market: like oil right now.