Wondering about forced liquidation of long options just before expiration

[zeek5]

Hi, chat newbie here.
I was wondering how and when IB might automatically liquidate a long call options position that was in the money, and would put me way out of compliance with margin, if it were to be automatically exercised after the close.
I realize and accept that IB needs to be assured that my account not be put in a margin violation position and was wondering if I could put off their liquidation algorhythm with a combination (closing) order such as a limit sell order, combined with MOC sell order?
In this case, if the limit sell price was not hit, the sell MOC should do the trick and close out the options position and keep me in compliance.
Would this work to close the order (through limit or MOC) and keep IB from liquidating me automatically as we approached the end of trading for the option?

 

[LanceJ]

It is more like the OCC will execute any options expiring in the money by 1 penny. If you do not tell your broker to Do Not Exercise in the hour after close, you will get the shares on margin. Then the next market open you will probably get liquidated immediately for a loss to relieve your margin requirements.

 

[zeek5]

Thanks. But I have read that IB will automatically liquidate some positions in your account even before the market close to avoid an impending automatic options exercise on expiration that would put your account in a margin violation position. That is the IB action that I wish to avoid.
(And just for clarity, the combination order I proposed is an "order cancels order" instruction where if the limit order is filled, the MOC order is canceled and visa versa)

 

[ajacobson]

Ask your broker what their "contrary exercise cutoff" is just to be certain.

 

[Option_Attack]

It's been my experience that IB will auto liquidate ITM positions that violate "Post-Expiry Margin." This will show up as a red item on your account window. Last time they got me I think it was around 14:00 CST (on expiry day).

 

[zeek5]

Very useful, thanks.

 

[ET180]

Then the next market open you will probably get liquidated immediately for a loss to relieve your margin requirements.

Not to nitpick, but could possibly be for a further profit if the markets moved in favor of the position after the previous close.

 

[JSOP]

Hi, chat newbie here.
I was wondering how and when IB might automatically liquidate a long call options position that was in the money, and would put me way out of compliance with margin, if it were to be automatically exercised after the close.
I realize and accept that IB needs to be assured that my account not be put in a margin violation position and was wondering if I could put off their liquidation algorhythm with a combination (closing) order such as a limit sell order, combined with MOC sell order?
In this case, if the limit sell price was not hit, the sell MOC should do the trick and close out the options position and keep me in compliance.
Would this work to close the order (through limit or MOC) and keep IB from liquidating me automatically as we approached the end of trading for the option?

Read IB's policy on its website regarding auto-liquidation of options.

 

[TrailerParkTed]

Hi, chat newbie here.
I was wondering how and when IB might automatically liquidate a long call options position that was in the money, and would put me way out of compliance with margin, if it were to be automatically exercised after the close.
I realize and accept that IB needs to be assured that my account not be put in a margin violation position and was wondering if I could put off their liquidation algorhythm with a combination (closing) order such as a limit sell order, combined with MOC sell order?
In this case, if the limit sell price was not hit, the sell MOC should do the trick and close out the options position and keep me in compliance.
Would this work to close the order (through limit or MOC) and keep IB from liquidating me automatically as we approached the end of trading for the option?

IB closed out a position I had at 2PM EST which helped me because I forgot and the options got filled at a decent price. If you don’t have the BP you will get liquidated before 3pm.

 

[TheGoonior2]

Last time they got me I think it was around 14:00 CST (on expiry day).

The last time I talked to customer service about this (a few months back, I believe), I couldn't get a definitive answer. They made it sound like it was at their discretion and could be a couple of hours prior to close. You definitely want to keep an eye out for that little red item in your account window (I think it's Equity With Loan)