Question on Options Expiration and Trading Halt: HAR

[kny3]

Quote from xflat2186:

Thats the OCC's position on things but if you're long those calls you'd have better told your clearing firm not to exercise them. Otherwise you're long stock from a lot higher then where its trading


Good idea


and rest assured that most of the people long those puts are going to exercise them.

Not necessarily. The OCC won't exercise them unless they are notified that they should do so. What % of traders and investors contacted their broker and said "Exercise the O-T-M 95 put?" Some thought they were worthless, others like you thought they would be exercised automatically bacause they were in-the-money. As far as OCC thought, they were OTM.

Lets see Monday what % of the 95 puts were exercised. I'll post it.

I'm hoping that since this is a forum where ideas are exchanged, a few traders learn something that might spare them from some pain down the road.



kny 3

 

[xflat2186]

Thats a good point, the retail investors probably wont know enough to exercise their puts but you can bet the firm guys and the MM's will can the exercise on their calls and do the puts.

 

[zdreg]

Quote from kny3:

Not necessarily. The OCC won't exercise them unless they are notified that they should do so. What % of traders and investors contacted their broker and said "Exercise the O-T-M 95 put?" Some thought they were worthless, others like you thought they would be exercised automatically bacause they were in-the-money. As far as OCC thought, they were OTM.

Lets see Monday what % of the 95 puts were exercised. I'll post it.

I'm hoping that since this is a forum where ideas are exchanged, a few traders learn something that might spare them from some pain down the road.



kny 3

you are a complete idiot.

the closing price was $85 during regular hour trading. no notification was necessary for 95 long put holders to exercise their puts. 95 long put holders were automatically exercised.

 

[neke]

Quote from zdreg:

you are a complete idiot.

the closing price was $85 during regular hour trading. no notification was necessary for 95 long put holders to exercise their puts. 95 long put holders were automatically exercised.

What kny was saying is that though you saw the last traded price as $85 before the halt, that is not necessarily the price the OCC will use to determine whether to exercise or not. I would be surprised if it is not, If anything I should expect 82.45 which was the price in after-hours, not 102 or 105. We shall see.

 

[spindr0]

This is part of the quote from the OCC

"...HAR Expiration Exercise Procedures
September series of HAR options expire September 22, 2007. For purposes of calculating a price for use in expiration processing, OCC WILL USE THE LAST AVAILABLE HAR PRICE FROM SEPTEMBER 21, 2007. OCC anticipates expiring HAR options will be processed in the normal fashion this weekend, including the use of the customary in-the-money thresholds to effect exercise of expiring HAR positions. ..."

Read that quote well. "OCC will use the last available HAR price from September 21..." Guess what? The last available price from the primary market could be $102 or $100, not $85. If you own a 95 call, the OCC would say it's $5 or $7 I-T-M. You must contact your broker to NOT exercise the 95 or 100 call. You must call your broker to exercise your long 100 or 95 put because they were O-T-M with the stock at $102.

LOL. That quote does not say the last available HAR price from September 21,2007 "DURING REGULAR HOURS." The last known quote from September 21st is what HAR traded at, at the end of the day ($82+)

 

[spindr0]

Why would you exercise them? Because when the stock stopped and didn't re-open, they were in-the-money. The OCC will exercise them automatically for you.

There are no free lunches

 

[Opra]

Quote from spindr0:

LOL. That quote does not say the last available HAR price from September 21,2007 "DURING REGULAR HOURS." The last known quote from September 21st is what HAR traded at, at the end of the day ($82+)

That's interesting, but I would think that the last available price will be the closing price during regular hours (though I have not read the specifics from OCC document so can't be 100% sure), otherwise OCC is really putting itself into a position it does not want to be because anything can happen after market closing to a company. Hope someone more knowledgeable can shed a light.

 

[zdreg]

Quote from neke:

What kny was saying is that though you saw the last traded price as $85 before the halt, that is not necessarily the price the OCC will use to determine whether to exercise or not. I would be surprised if it is not, If anything I should expect 82.45 which was the price in after-hours, not 102 or 105. We shall see.

kny was not saying anything like you said. I wrote my post after KNY posted furthermore HAR reopened for MOC orders which was $85 and is the official closing price of the day.

 

[zdreg]

Quote from Opra:

That's interesting, but I would think that the last available price will be the closing price during regular hours (though I have not read the specifics from OCC document so can't be 100% sure), otherwise OCC is really putting itself into a position it does not want to be because anything can happen after market closing to a company. Hope someone more knowledgeable can shed a light.

at least you are honest enough not to pretend to know the answer.

 

[zdreg]

Quote from Wayne Gibbous:

Bad things could happen, even with long options, due to auto-exercise. For example, IB will simply close you out Monday at whatever price: http://www.elitetrader.com/vb/showthread.php?s=&threadid=51251

I'm sure the info you need (buried deeply?) is in the "Characteristics and Risks" statement from OCC.

http://www.optionsclearing.com/

why don't you read the document. your reference to the other thread is a waste of time because the level of understanding there is about the same as this thread. alot of malarkey and good for a laugh.
if people do not take the time to avail themselves to learn the rules of the game they should not be trading.