Sounds reasonable.
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TDA...Look what I found in the bowels of the disclosures
- Thread starter Cabin111
- Start date
so basically, close any non cash settled options before they expire if they're anywhere near the money?
Because it is in contrary to Rule 805 d(2) by the OCC, the Option Clearing Corporation which states:
(d) Each Clearing Member shall be deemed to have properly and irrevocably tendered to the Corporation, immediately prior to the expiration time for such option contracts on each expiration date, an exercise notice with respect to: (1) each option contract listed in the Clearing Member’s Expiration Exercise Report that the Clearing Member has instructed the Corporation to exercise in accordance with subparagraph (b) or (c), and (2) every option contract of each series listed in the Clearing Member’s Expiration Exercise Report that has an exercise price below (in the case of a call) or above (in the case of a put) the closing price of the underlying security by $0.01 or more, unless the Clearing Member shall have duly instructed the Corporation, in accordance with subparagraph (b), to exercise none, or fewer than all, of the option contracts of such series carried in such account, provided that in the case of options with an exercise price expressed as a multiple of the per-unit price, in making the above calculations such multiple shall be applied to the closing price. If a Clearing Member desires that any such option contract not be exercised, it shall be the responsibility of the Clearing Member to give appropriate instructions to the Corporation in accordance with subparagraph (b)
https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occ_rules.pdf;
And furthermore, FINRA has dictated that exercising of options is to follow the rules and procedures established by the clearing corporations for options which is the OCC in Rules 2360. Options Sections b) (23) Tendering Procedures for Exercise of Options Paragraph (A)(ii) Exercise of Options Contracts :
(ii) Special procedures apply to the exercise of standardized equity options on the business day of their expiration, or, in the case of standardized equity options expiring on a day that is not a business day, on the last business day before their expiration ("expiring options"). Unless waived by The Options Clearing Corporation, expiring standardized equity options are subject to the Exercise-by-Exception ("Ex-by-Ex") procedure under The Options Clearing Corporation Rule 805. This Rule provides that, unless contrary instructions are given, standardized equity option contracts that are in-the-money by specified amounts shall be automatically exercised. In addition to The Options Clearing Corporation rules, the following FINRA requirements apply with respect to expiring standardized equity options.
So they are bluffing.
If you don't want to have them auto-exercised or don't want to give the broker "do not exercise" instructions before the cutoff time, yes.
Yes except when you are fully wronged and the broker has been completely negligent and going against SEC/FINRA and OCC rules would be considered pretty negligent on the broker's part. LOL Quite a few traders have successfully sued IB for their wrongful actions and brokers get sued by their clients still in court all the time even though they all signed the client agreement with the arbitration clause.
If Tiger Wood's ex-wife can even renegotiate a signed and sealed prenup, you can sue a broker with an arbitration clause. LOL
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