I'd agree with you on that. All I can repeat is that it sounds like a wad of excuses for his problem: 1) regarding, for the moment all the circumstances which got me into this position in the first place 2) the last time I could check my account was 2 hours before Friday's market opens 3) Even their warning emails about the liquidation threat (unlike any other IB emails) are going straight into the Junk Email bin of Windows Mail because they are so roughly formatted. Since the SEC invoked stricter shorting rules last month, I've gotten a number of pending "Buy In" notices for some of my short positions (as a live bulletin in the platform as well as an E-mail). I didn't bitch about it... I just adjusted them accordingly. AFAIK, IB is protecting me by quickly dealing with margin situations (mine and others).
I can tell you from personal experience what TOS would/will do. I have been a customer for 3 years and like many others I was in a pickle with margin calls. They DID NOT automatically liquidate my account but called me and e-mailed me to advise me of the situation. I was able to work with them to liquidate the positions that I wanted to in order to lessen the damage to the account. Even TOS during option expiration week and the previous week was extreamly busy and early am customer service had busy signals HOWEVER although you will sometimes be assigned automatically they will never liquidate your positions without trying to get a hold of you.
The OCC issues assignment notices and the brokers assigned them to individual accounts, based on a pre-determined system. Perhaps oldest positions assigned first; perhaps random. But TOS sounds tons better than IB. But it is more expensive. Mark
Spindr, yes you're right about me making excuses, there is an element of that. It was my fault I got into that position. But being in Australia is one of my excuses and that is my reality. So the bottom line now is that I wont trade vertical spreads etc any more with IB because there is too much risk of assignment and IB's behavior for me on assignment is too draconian. I am simply too exposed to their slash and burn policy. Even though I will be paying higher commissions at TOS, at least I will get a few hours of grace on assignment to close a position in a reasonable way. The money I save on one incident of that kind will pay the commission on a large number of contracts.
There are two intelligent steps you can take to alleviate such problems. They would allow you to continue to sell those vertical spreads: 1) Trade options with European style options. No early exercise. 2) Manage risk better and don't hold positions when the short moves into the money. Pick your own point at which to adjust or exit the trade, but don't sit quietly and wait for assignment. Sorry you had this unpleasant experience. Mark
This has been a great thread with the bottomline being: Don't have a short position in options with IB, even if it is part of a leg. If you want to do credit spreads, etc.... go with a broker like TOS who has the support staff to help prevent disaster from occurring to your account. Use IB for futures, stocks, forex only.
I disagree with your bottom line. IB is nasty when things go badly, but 1) don't sit with credit spreads that move deep into the money. 2) better yet, don't use your entire margin allocation. Leave yourself room 3) You can trade index options - European style with no early exercise risk. Mark
This is the ONLY problem in this entire thread. People should never come anywhere CLOSE to their margin max. This is the cause of death of a lot of traders. They do not grasp things like $500 day margin controlling $70,000, and then loading up on a lot contracts to "scalp" or trade intraday. It only takes one bad hiccup. And with the recent volatiilty, yeeks...