Looking at the massive volume in AFRM, the $130-$140s been insane all week. It looks like its going to bust its All Time high most likely today because buying will not stop. My question, when do the people on Robinhood, IBKR and others start closing out those calls? Several trading forums been calling for the big Gamma Squeeze, seems to have worked with AFRM. I figured the kids don't have the equity.
My educated guess is that most option traders - 95% - do not have the equity to cover their option trades. They have no intention of trading the underlying and will close the trade before expiry.
You should always close the trade than exercise it unless there was a dividend. I'd rather just close it than risk holding shares.
Depends on the broker, but there's a secret way around it. Say you have 50 open calls on UPST that expire that afternoon..... ie $1.5M dollars. Your broker's system is gonna flag that and an actual human will close the position with a market order, the actual time depending on how busy they are. It could be as early as 2pm. You can always call them and tell them you're aware and watching, and that you will close by the end of the day. Some will let you do that if you have a long term relationship. But the ultra top-secret, super sneaky trick to NOT get flagged by their computers... I probably shouldn't write this lol.... because I'm sure at a minimum IB will fix the glitch when they read VZ's post here.... But if you want to get around a forced closing of an open option position that the acount does not have the overnight buying power to purchase the underlying on opex.... .... place a sell to close market order, but check the "market on close" box. It trick-f's their systems lol, your position will never trigger an alert. Just make sure you're watching.... and you better have a back-up plan if your internet goes down at 3:59:30 on Friday afternoon. It could happen. Believe me....
My question was the forced selling because the Robinhooders do not have the equity to buy the size they were sporting on chats.
IB read your post, they restricts bigger size by 2:00 PM unless you are Bill Hwang and than it’s unlimited! EONs ago I had a broker collapse while holding too many AAPL calls. They were up and running after the Close with AAPL up $10. Back than, Margin was decent or kind. They shorted it AH and boxed the position because them shares we headed to my account. Now, they are not so benevolent?