TOS assignment fee.

T

TITANIMUM

l believe it is $15 if assigned. how often do these assignment happen? eg. if your option does go ITM, or is already ITM when trade opened, eg in a ratio back spread, where the short leg can be deep ITM.

TOS assignments happen 10% of the time when ITM? to avoid those fees, guess could do some index options like XEO which can only be exercised on last day? any other options are european style?
 
Read more about automatic exercise at the options clearing corporation. Options are automatically assigned if they are $0.01 or better ITM by the clearing firm at expiration almost all of the time. Even if there are no other sides, clearing members will likely take the other side of open interests and likely exercise the option and gain a miniscule profit (even $1 or $2 total) because they have little to no execution costs. Basically, if you are 0.01 or more ITM, expect to be exercised unless you close the contract out yourself before markets close on expiration date.

Of course there is early assignment risk. This is the risk you take when you are short options. You don't get to choose. It comes with the territory and the buyer can exercise for whatever reason they see fit. I've had options exercised on me well before expiration date but they were slightly ITM. It happens. You have to add that $15 fee into the "shyt happens" bucket.

Some index options are european style.
 
butterfacetrader said:
Read more about automatic exercise at the options clearing corporation. Options are automatically assigned if they are $0.01 or better ITM by the clearing firm at expiration almost all of the time. Even if there are no other sides, clearing members will likely take the other side of open interests and likely exercise the option and gain a miniscule profit (even $1 or $2 total) because they have little to no execution costs. Basically, if you are 0.01 or more ITM, expect to be exercised unless you close the contract out yourself before markets close on expiration date.

Of course there is early assignment risk. This is the risk you take when you are short options. You don't get to choose. It comes with the territory and the buyer can exercise for whatever reason they see fit. I've had options exercised on me well before expiration date but they were slightly ITM. It happens. You have to add that $15 fee into the "shyt happens" bucket.

Some index options are european style.
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l often open trades deep ITM and rarely do they get assigned before expiration. l mean perhaps ~5% frequency? 100% frequency if leave it ITM at end of trading day without buying back, on expiration date.

in your experience, on TOS how often do these $15 assignments occur for options which are ITM? how about other TOS traders?
 
TITANIMUM said:
l often open trades deep ITM and rarely do they get assigned before expiration. l mean perhaps ~5% frequency? 100% frequency if leave it ITM at end of trading day without buying back, on expiration date.

in your experience, on TOS how often do these $15 assignments occur for options which are ITM? how about other TOS traders?
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I find it highly HIGHLY _H_I_G_H_L_Y_ unlikely you can sell a deep ITM option, and for it to expire DITM and not get assigned. I find zero chance of this happening. It should be assigned 100% of the time. WTF is this, free money they are handing out? Sign me up.

If you are a buyer and you set the default to only assign when you request even when ITM (you can do this setting), thats something else. But if you are a seller of options that are ITM, not a chance.

Yes, if you get assigned the $15 will be charged.
 
Sorry if l wasn't making myself clear. l said "l often open trades deep ITM and rarely do they get assigned before expiration. l mean perhaps ~5% frequency (do assignments before expiration date happens)? 100% frequency if leave it ITM at end of trading day , on expiration date."

do you not do trades which are deep ITM? or go ITM? if this happens roughly what % are you assigned BEFORE expiration?
 
Well that is a toss of the coin whether it gets early assignment. I've had that happen a few times for my short options. There is no reason for early assignment most of the time if it is near strike because the markets can change fast, even on expiration date. Mostly my early assignments of short options were from very DITM options.

Depends on your style. Some people open/sell deep ITM options right off the bat because there is zero carrying cost to the position. Say you want to be long you sell a DITM put to catch upside, since you are long biased based on your investing thesis. Depends on your style.

When DITM, early assignment is very low in my experience, but they do happen. Sometimes people do early assignment because it captures profit better than closing out an options contract that may be illiquid or have very bad stub quotes in them. I sometimes assign my long contracts that are DITM before expiration too and close the trade out on the equities side that way instead of just closing out the contract.

Toss of the coin regarding early assignment in general. There are no rules but chances are low for early assignment near strike and becomes more likely as they become very DITM. Most of the time the person on the other end may be a clearing member who has zero execution costs so they capture the entire profit by assigning you on expiration date, since they are delta hedging the entire way to expiration date anyway. But yes, you will get charged the fee every time you are assigned, so its a risk you have to account for in terms of the $15 fee.
 
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