OPtionshouse closed my expiring position without my consent

xandman said:
The OTM had nothing to do with it.

Check your message box and read the fine print. Don't use our forum to rant.
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I wouldn't consider this a rant. I think he has a legitimate complaint. Please let us know what they say Monday.
 
I just want to know how you have the balls to risk going short over $2M on a $50K account. I almost always submit close orders on spreads before expiry just because the notional values scare the crap out of me.
 
I'm not sure if some of the posters understand credit spreads. I did not have more than $12,000 at risk. My account is close to $42000 in cash balance. Since I had 120 long 196 calls, my max loss is $100 per contract, or $12,000. So at no time are they at risk nor am I at risk for more than $12,000, less the credit I received.
I have traded credit spreads for over three years now and at times have had ITM positions exercised and lost the whole margin amount. Standard procedure.
Also, the trading platform will not let you place a trade unless you have enough cash to cover the margin. At no time was more than 1/3 of my cash balance at risk.
Bottom line is they had no reason to close those positions.
 
jimmyjazz said:
I just want to know how you have the balls to risk going short over $2M on a $50K account. I almost always submit close orders on spreads before expiry just because the notional values scare the crap out of me.
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You don't understand how credit spreads work, the maximum risk was $12,000 minus credit received.


  • SPY less than 195.00
  • Sell 120 contracts SPY 195 Calls
  • Buy 120 contracts SPY 196 Calls


jimmyjazz

  1. What is the value of the SPY 195/196 call credit spread if the SPY closes below $195.00 at expiry?
  2. What is the value of the SPY 195/196 call credit spread if the SPY closes above $196.00 at expiry ?


:)
 
Jimmyjazz,

Margin on a SPY 195/196 bear credit spread is $100. that is the most at risk. The loss is limited. I had 120 spreads, so $12,000 is the most at risk, not $2M.

Hope this explains it better
 
bthale said:
Jimmyjazz,

Margin on a SPY 195/196 bear credit spread is $100. that is the most at risk. The loss is limited. I had 120 spreads, so $12,000 is the most at risk, not $2M.

Hope this explains it better
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Maybe there is a clause due to the settlement of SPY and you wouldn't be covered if it settled above 195 (no matter how slight the chance) and you were put the stock? I guess the question I would have is why not trade SPX? You could accomplish the same thing with 12 spreads and they are cash settled so you don't have the assignment issue. Tax treatment is better too.
 
I think I found the answer,

"If you do not want to exercise an expiring in-the-money leg of a spread, you must notify OptionsHouse by 3:20 CT on Friday before expiration, by calling the Trade Desk"

So I guess I have to call them. I have traded TD Ameritrade for 3 years and never had to call them about my intentions. The reason I moved my account is because TD Ameritrade was killing me on commissions. Over $16K so far this year. OptionsHouse would be around $3500 by comparison.
 
bthale said:
I think I found the answer,

"If you do not want to exercise an expiring in-the-money leg of a spread, you must notify OptionsHouse by 3:20 CT on Friday before expiration, by calling the Trade Desk"

So I guess I have to call them. I have traded TD Ameritrade for 3 years and never had to call them about my intentions. The reason I moved my account is because TD Ameritrade was killing me on commissions. Over $16K so far this year. OptionsHouse would be around $3500 by comparison.
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But you wouldn't have been in the money on your short. As for commissions you could reduce it by a factor of 10 with SPX
 
Correct. It would have been OTM. I guess I just have to call and say my intentions are to let them expire, and I hope that would do it.

I was trading SPX but it's much harder to get out on the last day if you need to close or roll over. I've had days when it just wouldn't happen. I think the reason is because SPX is still "open cry" (filled by humans), and SPY (filled electronically) is much easier to close, adjust , roll over, or whatever you need to do.

I only trade SPX or SPY. It's much simpler.

I wonder if there is any major differences in exercises and expiration using /ES instead? (E-mini S&P futures)
 
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