Option House just closed my position 30 min before it became profitable ON A >>>CASH<<< ONLY ACCOUNT

newwurldmn said:
Cash account matters. He can't take delivery and funds must settle. OH can't hold positions in street name for a cash account.
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Sure, I understand that they are obligated. I was posing a hypothetical in response to the idea that they'd exercise and offset the shares.
 
FSU said:
On the off chance you are really looking for a reply instead of just ranting,

A) Where the option expired is not relevant. There was a risk that it would have been in the money and be auto exercised in an account with not enough money to pay for the stock. You say they could have waited until 3:59 to see, but this isn't really practical. You aren't their only customer, they simply can't do this for every customer in your position in the last minute of trading.

B) Filing a contra exercise form for you if they expire in the money would create other problems. I can hear you saying, "these options were worth 2 and the let them expire worthless" Better for them to deal with the problem in advance.

C) You say that stock could have been immediately sold for a profit. No, that's not true. You would get the stock on Monday, and it could be a lot lower.

This issue could be fixed if you traded cash settled indexes where there is no risk of stock being assigned to you.
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A) This is retarded. It implies the system isn't sophisticated enough to put a market sell at 3:59 to auto-execute.

B) This is retarded. It is infinitely worse to have some optionshouse n00b trading on your account and ruining your trading strategy moments before it turns into a 700% profit. I suspect this propaganda is in place to prevent large firm market makers from losing significant amounts of money on Friday.

I would not let the options expire worthless, although once I did with another broker who had no problem with the do not exercise order due to a personal emergency. They had on record that I wanted this handled this way rather than some idiot interfering with my trades.
 
VanishingMediator said:
A) This is retarded. It implies the system isn't sophisticated enough to put a market sell at 3:59 to auto-execute.

B) This is retarded. It is infinitely worse to have some optionshouse n00b trading on your account and ruining your trading strategy moments before it turns into a 700% profit. I suspect this propaganda is in place to prevent large firm market makers from losing significant amounts of money on Friday.

I would not let the options expire worthless, although once I did with another broker who had no problem with the do not exercise order due to a personal emergency. They had on record that I wanted this handled this way rather than some idiot interfering with my trades.
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Respectfully, you are the noob.
 
Their argument is pure idiocy.

We had to liquidate because they might go in the money and be exercised. We can't "DNE" (Do not exercise) because then they might go in the money and NOT be exercised.

I am fine with the risk of them not being exercised after reaching expiration in the money. I am watching my account and will not let that happen. There is no reason in this case for these geniuses to even be looking at my account. It's my money at risk, not theirs.

Given a choice between interfering with customer trades and ruining their strategies, defeating the entire purpose of the service they offer, and allowing the customer to bear the risk of options expiring despite being in the money, the better choice should be obvious.

Why would I pay someone to screw up my trades in the middle rather than just knowing I will lose my money if I don't close before 4:00?
 
You realize that even for ITM options, there are plenty of times shortly before expiration where there is no bid for the system to hit, right? And if there was, in the case of your ".14" options, would you have been happy if the bid had been hit on a .02/.15 market?
 
trickyname said:
You realize that even for ITM options, there are plenty of times shortly before expiration where there is no bid for the system to hit, right? And if there was, in the case of your ".14" options, would you have been happy if the bid had been hit on a .02/.15 market?
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A) They sold the options for .02 anyways
B) Selling for .02 is better than just a DNE regardless of moneyness
C) Either one allows me to pursue trading strategies without OptionsHouse monkeying around in my account
 
I think it's shit that they closed it out ~3 hours before the close. I'd certainly move my business elsewhere, but you're not going to get anywhere. Your time in mediation wouldn't be worth it and you'd lose. Personally, I wouldn't touch any Peak6 product.

I had a system warning at IB during the Enron mess when I was long futures on a scalp. The vola was crazy and a bad mark caused a liquidation when none should've occurred. IB covered it in three days.

I would suggest moving to IB or similar.
 
So, to recap: you're angry they sold your options for .02, because selling for .02 is better than a DNE, yet you wanted to have them marked DNE so you could continue trading until the close?

You're right, this is a common strategy used by prime brokers to collude with market-makers to force them to buy options that they know will expire worthless shortly thereafter, because they will move the market to ensure that happens.
 
trickyname said:
So, to recap: you're angry they sold your options for .02, because selling for .02 is better than a DNE, yet you wanted to have them marked DNE so you could continue trading until the close?

You're right, this is a common strategy used by prime brokers to collude with market-makers to force them to buy options that they know will expire worthless shortly thereafter, because they will move the market to ensure that happens.
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No. If I sold them for .02 cents close to close because of a lack of bids it would be better than DNE or OH messing with my account either one.
 
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