This is one person's testimonial about an aspect of trading options through IB. I cut-and-pasted this from elsewhere Comments? (Disclaimer: I am a long-time IB customer, so I am not involved in any kind of campaign to slam IB): âI just wanted to pass along an experience I had with Interactive Brokers (IB) that I thought was important for everybody to be aware of. I executed the GOOG spreads you talked about prior to earnings last week. Yesterday, I was assigned the Feb 470 puts. IB never notified me of the assignment, which caused a cash deficit in the account. Rather than notifying me of the deficit, they proceeded to liquidate random positions (including non-GOOG positions) until the cash deficit was satisfied. This liquidation happened first thing in the morning. I was alerted to the problem when I received email confirmations of the liquidating trades. I called to inquire about the trades, and that is when they told me I had been assigned in my account. I complained about not having an opportunity to rectify the deficit myself, and they responded that it is not their policy to notify account holders when they have been assigned an option! I have been a professional options trader for 16 years, and have never heard of anything so careless and dangerous to an account holder. As even amateur traders know, option assignments have a huge impact on the cash positions in an account. Essentially my entire portfolio was shattered because of this situation. I called Schwab, OptionsXpress and thinkorswim. They all have a policy of alerting account holders immediately of an assignment. I can't understand Interactive Brokers' policy, but I think your readers should be aware of this danger when holding an account with them. By the way, I closed my account with them immediately. They may have the best rates, but the risk they choose to put their customers at through this policy is too large to offset the lower rates."
Why are you cutting and paste from a newbie trader who didn't read the agreements which he signed, when he got an account. It says in the agreements that IB can liquidate your positions without warning if you will exceed margin requirements. This is to protect IB and all it's customers.
Hasn't this one been done to death in another thread? Wasn't the outcome that IB explained how their policy works and some liked it, and some didnt? Almost a philosophical split between personal responsbility and (if I recall the quote right) IB should behave like a member of your family (or not). I think its "polite" to quote the original poster and also where it was posted. Otherwise someone might just accuse you of being a stirrer and a bozo
I think this issue was fairly comprehensively addressed by IB in another thread. 4th post and you are attacking IB? As a general principle, false name tactics on web boards just tell me to stay away from the initiating brokers as they have no ethics e.g. The posts attacking IB which seem to come from bucket shops tells me loud and clear what kind of companies they are.
If you have an ITM option position you need to have enough on the ball to make sure you aren't assigned. Options aren't for everybody. Get a little bit sloppy and you will get slapped around. It's not IB's fault. Would other brokers hold your hand a bit? Probably. So move your account to them. Good luck.
ozzie_bozo, IB does automatic margin liquidation. Most of the times, they are right in doing so since this policy was mentioned in their agreement. However, you should check if any particular incident is caused by IB's system's bug or not. In one instance in my IRA account, IB accepted a limit order and even mentioned that I still had buying power left. Then after a while, once the order was executed, IB did an automatic margin liquidation in a minute. IB's system should not have accepted that simple limit order of certain number of shares if I really did not have enough buying power in the worst case situation. (By the way, IB's system did indicate that I did have enough buying power when IB transmitted the order.) Moreover, I was even providing liquidity and I did not have any IRA fee issues. I called IB. After a long hold and a long conversation, IB representative did realize that it was IB's system's bug, and assured me that the CSR will notify the programmers to correct this bug so that IB's system would not let the limit orders to be placed at the first place if the buying power may not be available in the conservative scenario. I am not sure if IB corrected the bug.
No "pro" would be caught with their pants-down on deep ITM shorts. Anyone with any experience knows the risk of assignment. Your notification is the long/short shares appearing in your account.