Yes, you just can't be careless with ANY trade, especially options - long or short. It may be a tricky point but with "automatic exercise" for ITM options, bad things can happen even if you only hold long ops. Yeah you could say he didn't lose more money on the options than he paid for, but he sure did on the stock before he could do anything about it. Good trading to all.
thats such a stupid rule. y not just sell the options instead of buying the stock. ask user do u want to exercise option or buy stock.
Hi Buddy, The great thing about BUYING options is that you cannot lose more than you paid. Selling options is a whole different ballgame. Signup for Options Weekly's Newsletter (its free) and they give a new option trade idea every week. http://www.optionsweekly.com Best of luck!
That's OK... It's not the first time my sense of humor fails to make an impression. I'll just have to live with it, I guess.
OCC Threshold is 1 penny. And you get stock. What IB did was wrong, they should have initiated a Do not exercise instruction to the OCC when Risk Management noticed this was an IRA Type 1 cash account with only 800 dollars instead of letting a shit load of google stock just land on that account forcing a liquidation. IB dropped the ball. ALL CASH ACCOUNTS (Type 1) should automatically send a DNE to the OCC if there is not enough cash to cover delivery of securities. Etrade/TD/Scottrade would have sent DNE to the OCC on such an occasion. I do not understand why IB would not.
King: If the stock rises on monday and there is no assignment the holder of the account can sue them for profits missed. DNE is not a clear thing. It should be an option, but not the default. PS: King: are we going down or up in the stock market for tomorrow and rest of week?