I have a few questions about exercising opts at IB for anyone who's done this. I have talked to IB help twice and gotten different answers in a few key areas. I have some covered calls that are in the money. By what increment do the short calls need to be in the money to be automatically assigned? I thought the old CBOE manual said 3/8ths, but IB said .75. I thought long calls were .75 and short were 3/8ths but the CBOE site now says "by a certain amount" rather than the actual amount. How much does IB charge to exercise per contract? The first IB person said $3 per and the second said $1 per contract. This would make it CHEAPER to get called away than to close out on expiration day. If true ($1), this is one amazing brokerage for retailers. Thanks in Advance
ktm, I'm going to paste some info from the web site. a bit long winded though. I am not sure if the 3/4 of a point rule is and exchange or IB mandate. The rules do vary from exchange to exchange. e.g. In HK it is 3% for auto exercise, Australia 1 penny. I don't know the US rules but when it comes to exercise - better safe than sorry. The fee for the exercise is $1. Perhaps the rep added 1.95 for the trade and $1 for the exercise. from the website: Exercise U.S. exchange-traded equity options are "physical delivery" options. That is, the owner of a call option has the right, upon "exercise" prior to the time for expiration, to receive physical delivery of the underlying stock in return for payment of the "exercise price" and the owner of a put option has the right, upon exercise, to make delivery of the underlying stock in return for receipt of the exercise price. These options are exercised "American Style", which means that they may be exercised at any time between the date of purchase and the expiration date. "European Style" options may be exercised only on the expiration date. The expiration date is the last day that an option may be exercised. If, at expiration, a Customer (1) desires to exercise a long option position that is in-the-money by less than 3/4 of a point or more, or (2) does not desire to exercise a long option position that is in-the-money by 3/4 of a point or more, the Customer must provide Interactive Brokers with a "contrary exercise notice" instruction by e-mail to the IB Clearing Department at ibclearing@interactivebrokers.com with a copy ("cc:") to the IB Help Desk at help@interactivebrokers.com prior to 4:30 p.m. U.S. Eastern Standard Time on the last trading day (usually the third Friday of the expiration month, unless such Friday is a holiday, then the preceding Thursday) prior to the option's expiration date (Saturday). In the absence of written "contrary exercise notice" instructions received from Customer prior to 4:30 p.m. U.S. Eastern Standard Time on the last trading day, at expiration Customer's long call or put options contracts which are "in-the-money" by 3/4 of a point or more will be automatically exercised by OCC. The implication of the expiration date to a buyer (holder) of call equity options contracts who does not close out an options position prior to expiration is that positions that are in-the-money by 3/4 of a point or more will be automatically exercised by OCC and the holder will be long an equivalent number of shares. The implication of the expiration date to a seller (writer) of call equity options contracts who does not close out an options position prior to expiration is that the writer may be assigned, thereby obligating the call writer to deliver the number of shares represented by the options contracts at the exercise price. The implication of the expiration date to a buyer (holder) of put equity options contracts who does not close out an options position prior to expiration is that positions that are in-the-money by 3/4 of a point or more will be automatically exercised by OCC and the holder will be short an equivalent number of shares. The implication of the expiration date to a seller (writer) of put equity options contracts who does not close out an options position prior to expiration is that the put writer may be assigned, thereby obligating the put writer to purchase the number of shares represented by the options contracts at the exercise price. To exercise an option contract on any given date prior to the expiration date, Customer must deliver written "exercise" instructions via e-mail to the IB Clearing Department at ibclearing@interactivebrokers.com with a copy ("cc:") to the IB Help Desk at help@interactivebrokers.com by 4:30 p.m. U.S. Eastern Standard Time (EST).