I got a call from ameritrade today saying that if I do not close my in the money options by noon friday they will close them for me! The issue with that is I have a calender call on at a 16 strike price, the stock is currently trading at 16.03, if it falls 4c on friday it expires worthless, I realize I have to sell the front month prior to market close but 4 hours early seems insane. I called them back and explained that to them and they said they understood but that is there policy, I replied that if that is your policy fine, but I spend alot of money on commissions with you and if they are closed by anyone besides me I'm changing brokers. I see there point but why not the last 30 minutes. Can anyone tell me if this is the case with other online broker, ie. thinkorswim, etrade or elsewhere. Suggestions
I am assuming this is a cash account or IRA. In either case, IB will let you hold the positions into expiration and force the account into compliance at 9:40 on Monday morning. You'll probably save money on commissions as well (not just from the difference in rate). IB does not charge for exercise or assignments.
it is a cash account but I have a margin "backup", on my account info it says magin trading enabled, but I bought the position in cash. IB is interactive broker I assume
I apologize, IB is Interactive Brokers. If the account is a margin account, they should never liquidate you on Friday to avoid a cash deficit on Monday. That would be the only case that would make sense. Unless your in a margin deficit now and they are doing you a favor by giving you until noon tomorrow to clean it up. That is unlikely. These firms are not automated and need the 4 hours to have people manually liquidate thousands of accounts. That is why your 30 minute suggestion would not fly. IB would give you 10 minutes Monday morning to choose the stock you wanted to close out to bring the cash out of a deficit at which point we would automatically liquidate the account until the cash deficit was gone.
Fidelity says this: In the absence of any instructions from you, we will exercise any in-the-money options that remain in your account on their expiration day, so long as they are in-the-money by at least the threshold amount then in effect as established by the Options Clearing Corporation rules for such options or in accordance with Fidelityâs policies then in effect, as applicable. If you do not want us to exercise any expiring options, you must notify us by 4:20 p.m. Eastern time on the last business day before the expiration date. If we do not receive your instructions by this time, you agree to waive any and all claims for damage or loss that you might have against us, at that time or later, arising out of the fact that we did not receive your orders to exercise or not exercise in time. - Ray
Nothing personal but it never ceases to amaze me that peope pay their commission rate and get such treatment.
" I got a call from ameritrade today saying that if I do not close my in the money options by noon friday they will close them for me!" quote from thebubs I believe you knew all this when you opened your options account with ameritrade, its part of the literature that brokerages send out, i.e. your game plan should have taken this into account.
sadly i did not know this when i opened my account, its literature is very similar to schwabs that says if they have instructions from you they will follow them