Def, if you see this, please let me know what information you need from me to investigate for me. Obviously I won't post my account information here, but I will keep people on this thread updated as we work this out.
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PUT options liquidated at worst possible prices
- Thread starter somedudetrader
- Start date
Quote from One:
To understand what may have happened, the OP needs to answer the question asked several times: did he have any other positions whose margin requirements may have necessitated liquidation of the verticals?
Yeah, produce the IB liquidation bulletin, too. They send an email as well as a flash message in TWS. I suspect we're being trolled here.
well heres my thoughts for what its worth. Im an IB customer and have been on the wrong end of autoliquidation a couple of times (all my own fault). Once your account goes below 5% of requried margin you recieve a warning. when it goes negative auto-liquidation kicks in. It does not evaluate positions or consider any strategies or consider the effect on the whole account of any specific condition. There is a function where you can check a position to be considered last for auto liquidation but even this is not guaranteed.
It sounds well and truly like the OP got shafted, but from past experience this is how the auto liquidation function works and while I hope the OP gets something back here I wouldnt hold my breath
It sounds well and truly like the OP got shafted, but from past experience this is how the auto liquidation function works and while I hope the OP gets something back here I wouldnt hold my breath
Quote from One:
To understand what may have happened, the OP needs to answer the question asked several times: did he have any other positions whose margin requirements may have necessitated liquidation of the verticals?
Yes, and then the obvious solution would have been to place the liquidate last function on the puts.
If true, it's a tough loss to take. Wake up call.
I'm sorry to be reluctant to provide all information about my account (for obvious reasons). But seems like the community can benefit from my case so here is what I can tell everyone:
My positions in my account were:
- x amount of June SPY 119 long puts
- x amount of June SPY 114 short puts
- y amount of May USO 40 long puts
- y amount of May USO 37 short puts
- cash
So those are the only positions I had at the time. Obviously in yesterday's falling market, USO (oil) was also falling and my vertical spread there was earning money as well.
IB just shouldn't have taken the wide spread at the time and thinks that was the market price. If they find the real value of my positions, nothing should have been liquidated. If they see that for example the spread is 0.01 and 9999 for a $100 stock, how can they think 0.01 is the market price and liquidate because the account doesn't support a 0.01 position??
My positions in my account were:
- x amount of June SPY 119 long puts
- x amount of June SPY 114 short puts
- y amount of May USO 40 long puts
- y amount of May USO 37 short puts
- cash
So those are the only positions I had at the time. Obviously in yesterday's falling market, USO (oil) was also falling and my vertical spread there was earning money as well.
IB just shouldn't have taken the wide spread at the time and thinks that was the market price. If they find the real value of my positions, nothing should have been liquidated. If they see that for example the spread is 0.01 and 9999 for a $100 stock, how can they think 0.01 is the market price and liquidate because the account doesn't support a 0.01 position??
Quote from failed_trad3r:
IB is not wrong.
You were short 114 and long 119 puts. In rational markets these cancel out. But what if an irrational market causes your short 114 to be worth much more then the 119 puts?
Theoretically the difference is 5 SPY points. But practically, the risk is 119 SPY points. The reason is that a 114 put can be worth $100 when the 119 put is worth $1. Well you say thats impossible. Well if impossible if nobody is willing to sell the 114 put at less than $100, like yesterday.
I see why "failed" is in your moniker. If this is as OP says, he was screwed royally and will win arb. Frankly, I am an IB fanboy and this worries me. Time to think.
Quote from somedudetrader:
I'm sorry to be reluctant to provide all information about my account (for obvious reasons). But seems like the community can benefit from my case so here is what I can tell everyone:
My positions in my account were:
- x amount of June SPY 119 long puts
- x amount of June SPY 114 short puts
- y amount of May USO 40 long puts
- y amount of May USO 37 short puts
- cash
So those are the only positions I had at the time. Obviously in yesterday's falling market, USO (oil) was also falling and my vertical spread there was earning money as well.
IB just shouldn't have taken the wide spread at the time and thinks that was the market price. If they find the real value of my positions, nothing should have been liquidated. If they see that for example the spread is 0.01 and 9999 for a $100 stock, how can they think 0.01 is the market price and liquidate because the account doesn't support a 0.01 position??
The most likely explanation is that IB's own code for auto liquidation is flawed. This is a serious flaw. Not only that, previous post about IB liquidating the long puts FIRST is totally nuts. I am also following this thread closely.