Trading options on IB

Discussion in 'Options' started by eugenev99, Mar 4, 2013.

  1. eugenev99



    Does anyone know if Interactive Brokers automatically exercises the long leg of a spread if the short leg gets exercised?

    Also, and please excuse the beginner question, suppose that a credit spread is going well. Is there any reason to buy it back instead of letting all legs expire?

  2. The long leg will not exercise unless it's ITM or you instruct it to.

    Sometimes you may want to buy back a credit spread gone well so you can eliminate the margin.
  3. eugenev99


    Thanks for the concise answer!
  4. Regarding your question about closing a credit spread: there's no simple answer to this. It really depends on your prognosis of the probability that the short leg will close ITM at expiration.

    If it's 6 sigmas away from your short strike there's a small chance of this happening. But it can happen. Is it worth giving back some of your profits for peace of mind? That's up to you.
  5. It will if held through LTD
  6. PIN risk?

    I close or call and issue a do not exercise instruction.