I had 120 SPY 195/196 bear call spreads this past week. They expired worthless yesterday. But optionshouse closed the short 195 calls at .01 each, thereby robbing me of $120. I have been trading credit spreads with TDAMeritrade for 3 years and have NEVER had an option expiring worthless closed by the broker. I can't get to customer service before Monday, but I am hoping this is a glitch. Has anyone else experienced this? And before anyone talks about having enough funds, I had plenty. I only use 25% of my account each week, so I have close to $50,000 and the margin for the trade was $12,000
OPtionshouse closed my expiring position without my consent
- Thread starter bthale
- Start date
Hello fellow Trader,
I had them try to exercise my AMD $4 Calls (Stock closed at $4.01) a while back with another Brokerage. It's the new sneaky way to pilfer profits off us! Their idea is we are too stupid to call in and say "No, we don't desire to exercise our stock .01 in the money!" so they end up doing it themselves. It's a nice way to make $45 bucks on their part, how much did you get charged?
The new rule is you must tell your Broker in 24 hours before in"writing", you do not want to exercise the Calls or Puts. It's only been in the last six months these arses are trying to screw us over. Here's one for you, I had 200 Apple $637.50 Calls(Paid $380 and my Brokerage called on Thursday to warn me "we are going to exercise your Calls if any are in the money, unless you write to us!"
The stock flew to $651.5 and I dumped my Calls making a nice gain.
I did not have the liquid funds to exercise 20,000 shares of Apple, what were those idiots thinking?
I had them try to exercise my AMD $4 Calls (Stock closed at $4.01) a while back with another Brokerage. It's the new sneaky way to pilfer profits off us! Their idea is we are too stupid to call in and say "No, we don't desire to exercise our stock .01 in the money!" so they end up doing it themselves. It's a nice way to make $45 bucks on their part, how much did you get charged?
The new rule is you must tell your Broker in 24 hours before in"writing", you do not want to exercise the Calls or Puts. It's only been in the last six months these arses are trying to screw us over. Here's one for you, I had 200 Apple $637.50 Calls(Paid $380 and my Brokerage called on Thursday to warn me "we are going to exercise your Calls if any are in the money, unless you write to us!"
The stock flew to $651.5 and I dumped my Calls making a nice gain.
I did not have the liquid funds to exercise 20,000 shares of Apple, what were those idiots thinking?
Please people! Listen!
I have been trading credit spreads for over three years. I have NEVER had an OTM expiring option closed by the broker. EVER!
I have had ITM options closed and settled the day AFTER expiration, but I'm talking about OTM and worthless.
In fact, I think it is illegal to do so. I can't believe a brokerage would do this and keep any experienced option traders because the way I trade, this would happen weekly. No way would I stick with this broker. I'm hoping it's a glitch but this is only the second week I've been with Optionshouse and I had to roll over last weeks position. I'm pretty sure there are lots of credit spread traders and I would like to her from them and any experience with Optionshouse
I have been trading credit spreads for over three years. I have NEVER had an OTM expiring option closed by the broker. EVER!
I have had ITM options closed and settled the day AFTER expiration, but I'm talking about OTM and worthless.
In fact, I think it is illegal to do so. I can't believe a brokerage would do this and keep any experienced option traders because the way I trade, this would happen weekly. No way would I stick with this broker. I'm hoping it's a glitch but this is only the second week I've been with Optionshouse and I had to roll over last weeks position. I'm pretty sure there are lots of credit spread traders and I would like to her from them and any experience with Optionshouse
I had an OTM spread expiring worthless. Why would I call them?
Here is the problem the broker faces. If SPY had rallied over 195, your calls would have been assigned and you would have been long 12,000 shares. Even if it didn't rally that much before the close, if futures had rallied after the market closed, your spy calls might still be assigned, even though they would have closed out of the money. Put yourself in the brokers position, and you can see that this is a risk they weren't willing to take based on the equity in your account. Seems like a very reasonable cover on their part.
JesseJames, Under OCC rules, the clearing firm is required to exercise your options if they are even .01 in the money. This is not a little trick your firm made up to make extra money. You can file a "do not exercise" if you don't want to have them exercised. Clearing firms have different cutoff times for this form. They must notify the OCC by 530est on Friday of expiration, so they want a little lead time. Never heard of 24hours though. The earliest I have heard of is 4pm est.
JesseJames, Under OCC rules, the clearing firm is required to exercise your options if they are even .01 in the money. This is not a little trick your firm made up to make extra money. You can file a "do not exercise" if you don't want to have them exercised. Clearing firms have different cutoff times for this form. They must notify the OCC by 530est on Friday of expiration, so they want a little lead time. Never heard of 24hours though. The earliest I have heard of is 4pm est.
That is NOT a rule from the OCC. It must be a house rule from your broker.
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Unfortunately, it not illegal to do so. Every broker has the right to close your position if they feel it's necessary to protect them or the account. Every Broker dealer has a document called Written supervisory procedures (WSP). It descibes in detail the procedure the firm will follow under every circumstance. It's likely that your firm has put this in place to avoid margin calls when the underlying is with X% or $ of being ITM. Because they have thousands of accounts, they can't go though each account all day on expiration to stop a possible margin call, so they do this automatically. It's a shame, because if the account is not an IRA or similar, there is nothing wrong with getting a margin call. You just wire in money the following day.
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