SIVB/SBNY Option exercise problems

F

FSU

Both SIVB and SBNY have been halted. So, what happens if you have an options position, especially one the expires this Friday. Basically, is seems you are screwed.

The OCC has put out a memo that options can still be exercised, but if you don't have the corresponding stock most brokers seem to be blocking customers from exercising. Say you have a March 125 put in SIVB. The stock is worth very little if anything, but you may have to let it expire worthless. If you have a vertical put spread you could be really in trouble as your short may be assigned.

Even if your broker allows an exercise, you will have a massive margin requirement as you will be short shares as the last closing price and will have to pay hard to borrow fees.

The OCC has indicated they "may" offer a cash settlement sometime in the future, but no word yet.

Anyone here have a position in these options and what is your broker saying?

This just shows you could have a position you think is very safe and it turns out not to be.
 
FSU said:
Both SIVB and SBNY have been halted. So, what happens if you have an options position, especially one the expires this Friday. Basically, is seems you are screwed.

The OCC has put out a memo that options can still be exercised, but if you don't have the corresponding stock most brokers seem to be blocking customers from exercising. Say you have a March 125 put in SIVB. The stock is worth very little if anything, but you may have to let it expire worthless. If you have a vertical put spread you could be really in trouble as your short may be assigned.

Even if your broker allows an exercise, you will have a massive margin requirement as you will be short shares as the last closing price and will have to pay hard to borrow fees.

The OCC has indicated they "may" offer a cash settlement sometime in the future, but no word yet.

Anyone here have a position in these options and what is your broker saying?

This just shows you could have a position you think is very safe and it turns out not to be.
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Chances are good, the put buyer will just sell their options back to close their position, why would they exercise it? Of course, if they had SIVB stock, they would exercise it. There is always that risk and preferably, you have funds to cover the exercise. No, I do not have positions in SIVB stocks or options. Just giving my 2 cents.
 
smallfil said:
Chances are good, the put buyer will just sell their options back to close their position, why would they exercise it? Of course, if they had SIVB stock, they would exercise it. There is always that risk and preferably, you have funds to cover the exercise. No, I do not have positions in SIVB stocks or options. Just giving my 2 cents.
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They can't sell their options as both the stock and options have halted trading. Thats the problem.
 
"A spokesperson for Interactive Brokers, founded by billionaire Thomas Peterffy, told Forbes they’ll honor the contracts on Friday. That is if the holder either owns the shares already or has the cash to pay for borrowing them."

Still a rotten outcome, but I'll be it conforms to the ODD
 
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