should worthless option expiration count as a trade?

Discussion in 'Options' started by loufah, Nov 26, 2003.

  1. I haven't been able to open any new positions at my broker since Monday morning because I opened some option positions on Friday and they expired worthless, and the broker's current interpretation is that option expirations count as trades, so I was flagged as a PDT (and my account is < $25K).

    They're reviewing the interpretation of this rule, but I wonder if anyone here can point me to some precedents that may clarify things, one way or the other.
     
  2. Ebo

    Ebo

    Put more money in the account!
     
  3. That is right, of course it is a trade.

    Hahahah, you are also right.
     
  4. Trade options on futures and never worry about PDT again. For electronic contracts, look at DAX, ESTX50, CAC40, or if you can get access, options on the Kospi 200 index.

    You said 'they're reviewing the interpretation.'

    The fact is, they are not reviewing anything. They are just being nice.

    Stop wasting your time.

     
  5. Hi Bluehorseshoe. Can you trade futures options on contracts using elec platform? I always thought options are routed to a floor somewhere or OTC where you still have to talk to a broker. Eurex bunds for instance are elecronic w/o a floor BUT their options are manually executed where brokers are involved. Am I correct? Thanks
     
  6. All of the options mentioned above, and many others, including Bunds, HangSeng, Nikkei, and SPI, can be traded effectively on an electronic platform. As to some involving manual execution I couldn't say. Suffice to say I actively trade several of these contracts electronically without any issues. Specifically, I have traded GBL (Bund) options effectively w/ IB and with another platform. *I am trading spreads and occasionally naked positions & don't necessarily recommend the instruments for day trading or scalp. For daytrade or scalp, might as well stick w/ the futures contract directly.

    One other caveat: The CFTC, in its infinite wisdom, prohibits US RESIDENTS' from trading some (SOME, not ALL) overseas listed futures and options contracts. Thus if you reside in the land of the free and home of the naive, you will need to ascertain which of these contracts can be made available to you. If you find the CFTC too restrictive, I would recommend you move to Manitoba or Cabo Wabo! I'm in Asia ...

     
  7. You may want to argue that options technically expire on Saturday at midnight (and not on Friday).
     
  8. Thanks. I called the broker, IB, today and talked to a rep. Got a different rep this time - the one I talked to last week was fairly sympathetic and that said my case was going to be discussed at a meeting.

    I mentioned two things that I thought may help my case:

    - options technically expire on Saturday, not Friday
    - the definition of pattern day trading is 4 or more day trades in a 5-day period unless they're less than 6% of the total number of trades during that period. I made over 140 trades during that 5-day period, so my day trades were around 2%.

    The rep just curtly said "that's the way our software works". I asked if he could add my points to the file, because the other rep said it was going to be discussed at a meeting, and he sarcastically said "Well, you'll just have to wait until they have that meeting."

    At that point, I thanked him and said goodbye.