Thats a good point. In the past I have requested (and received )a trade made in error on my part to get busted. If you don't ask you don't have a chance As customers we need to be in partnership with our brokers with the attitude if we "win" they "win".
You guys are right, I should have asked to have them bust my trade since it was made based on the one they busted on me. Wouldn't have hurt to ask anyway! Wasn't sure what to do since this is the first time this has happened to me. I usually do mostly combo trades....oh well I guess this'll be a lesson...hopefully not an expensive one if the market consolidates here for a few days! Next time I'll just ask for a bust.
The best reason to post here is to share good info! I was not aware of the flexibility for working with 'busted' trades. Thanks for sharing. Mech
FYI, the broker expects to get the request to bust a trade prior to the start of the next trading day.
You are very wrong. A delay of 10 minutes is probably too long to get the trade busted. Time is of the essence. No market maker is going to bust a trade when you ask hours later. Mark
Take a scenerio (IN AN IRA ACCOUNT): You own 1000 XYZ Stock You are short 10 XYZ APR07 calls You enter an order to cover your short position and immediately upon confirmation you sell your 1000 XYZ Shares. Then CBOE THEN busts the 'cover' trade. What does your broker do since your broker won't allow you to be short naked options in an IRA Account?
I think you'd get a margin call or either the broker would immediately do a buy order for 10 XYZ APR07 calls at market price (serious potential to get ripped off). Or the broker might send you a message letting you know that you need to cover this with either stock or cover your shorts by the end of the day otherwise they'll do it for you. That's my guess....hope to never be in this situation!
Depending on your broker, TOS and IB will allow you to have short naked options because they are covered by cash even in an IRA account.
NOT naked calls...only cash secured puts or defined risk options in an IRA..This rules out selling straddles or reverse calendars. To answer Mech Trade's question. I have been in a situation where I was naked calls when the underlying was sold out from under me unexpectedly. Your account is "red-flagged"(unable to trade until resolved) but TOS help me out with resolving it.
Don't really understand the scenerio. Your initial position was a covered call. You covered the call. It was also a "ok" order. You then sold your stock. I don't see any naked option position in the IRA account. [edit] unless you sell the stocks before you cover your call.