Can Anyone Please Help Me??

Discussion in 'Options' started by Treve1, Apr 17, 2010.

  1. Treve1


    I have a huge problem with my stock options bought through interactive brokers. I invested a lot of money in several stock options and I made some profit. The expiration day was on Friday 16 and I didn't decide to exercise the options. I was told that if I don’t exercise them, the options will result in stocks. However, I checked my account today on Saturday and it shows all my options lost 100%. I am very much worried as I invested really big money, would someone tell me if I really lost all my money? Did I have to sell all the options on the expiration day? Any help on this will be much appreciated!!!
    Thank you!!!
  2. Options that are in the money by $0.01 or more at expiration are automatically exercised, meaning you should be long the stocks right now (Assuming you bought calls). The only issue I can see here is if you didn't have enough capital to purchase all the shares, I'm not sure what would happen in that case.
  3. MTE


    If you don't have enough cash to purchase the stock (assuming a long call exercise) then you get a margin call from your broker. If you don't respond then the broker would sell the shares for you.
  4. drcha


    It may be that IB does not have the quotes and positions in TWS until Monday.
  5. The only way you can get slammed (and yes I have seen it happen several times to others) - let your option go to shares over the weekend and then have the shares drop big before the open. It could go both ways, shares up on open, you'll be in black.
  6. Your options expired so that is why your account shows "loss." your options are automatically exercised. On Sunday the equivalent in stock will show up in your account. You have to have the cash to purchase the shares (50% with margin). If you have no intention of owning the stock, then you have to close out the option before expiration.
  7. to not exercise the option while you are in the money on expiration have "the stocks"...they are both the same

  8. 1) NEVER trade when you do not know the rules. And BIG Money? Are you insane?

    2) Sunday is when you should get the true value of your account, not Saturday.

    3) If you did not want to exercise the options, why didn't you sell them?

    What did you plan to do with them when you bought them? Or do you want to own the shares?

    4) Yes, you had to sell your options on expiration day - OR SOONER - or else allow them to become stock. How can you invest 'big money' and not know that?

    5) If the options were in the money, you did not lose much, if anything.

    The options clearing corporation exercised those options for you and IB will show that you own the shares Sunday.

    If you cannot meet a margin call, then IB will automatically sell those shares.

    BE VERY CAREFUL HERE. Call IB well before the market opens. Ask if you must sell the stock. Ask if they will do it, or whether you can do it. Ask how much time they will give you to do it. My guess is not more than 10 minutes, if that long.

    This margin call is a huge nuisance and may present some problems for you. But your money is not lost. At least not yet.

    6) Do yourself a favor, get an options education before you make another trade

  9. stoic


    Most of the above replies are correct. However I would like to add/clarify.

    1) It's very rare that any ITM option is allowed to expire. Even without the auto-exercise. I have had covered short position assigned when ITM .05 when auto-ex was only required at 75 cents.

    2) I get assigned on several positions almost every month. I never see the posting to the account till early Monday. Weekend processing and system batch processes needs to be completed.

    3) It is always best to ether close out your position or inform the broker of your intent to exercise. Allowing positions to just go auto-ex may not be the best method even when your more than happy to take a position in the underlying. A substantial majority of the brokerage firms that I have worked for have policies with regards to positions from auto-ex. First: Auto-exercise at whatever threshold was put in place to insure that investors did not incur a loss due to oversight. The threshold was .75 making sure auto-ex did not cost (commissions) more than it was worth. As commissions came down so did the threshold. Now, since it is assumed that the auto-ex was processed because of investor oversight the assumption is also that the account holder is also unaware of new positions in the account and added risk. I have spent more than a few weekends attempting to contact the account holder to gather intent. If we were unable to contact the account holder regarding the auto-ex and their intent, we would close out the positions come Monday at the open. I can't speak for IB and their policies, but it's always best to let them know what your intent is.

    4) Margin. The initial (Reg. T) requirement is 50%, the margin requirement or House requirement may be lower. Most firm's are from 30% to 40%. The account buying power is derived from the component that's driving the account, SMA or Maintenance Excess.
  10. Not sure but you may be caught in a bookeeping technicality until you get your statement on Sunday. IB may be showing the options as 100% losers since they expired and if in the money, were exercised.

    Once you get your statement, you'll know if any of them were assigned and you now have long or short positions in the underlyings. As mentioned by several posters, you have two issues to deal with Monday morning. If you have a margin problem then you need to get IB on the phone as soon as they're in Monday morning and find out if you have any leeway for covering or if they do it automatically/immediately.

    The second and bigger problem is directional risk. If they're not covering these positions immediately, you need to watch all carefully in the pre-market and deal with the adverse movers first. Determine your problem TODAY and get your plan of action together TODAY!

    If you don't get through to them early, deal with it yourself in the pre-market. If it comes to it, getting your account restricted isn't the end of the world. Losing a chunk of money might be.

    Lastly, thos it sounds harsh, options can be a monster if abused by ignorance. Don't dabble in what you don't understand. Go for it when you do.
    #10     Apr 18, 2010