Will my long option be excercised automatically at IB?

Discussion in 'Options' started by doctorbonez, Oct 22, 2011.

  1. I have a long call that closed ITM but I dont have enough margin to cover the excercise (only enough margin to cover 1/3 of the position).

    Anyone know if IB will:

    1) not autoexcercise and let expire
    2) excercise and sell at business open on monday

    My biggest fear is #2 in case the market tanks on monday.. #1 isn't much of a big deal. Ive got an incoming ACH but wont be credited for several days.

    (yea yea.. i shouldnt have held if i didnt want to excercise.. i was pretty sure it was going to close OTM but the stock rallied into the close and closed a couple of bucks ITM at the close... i had a work emergency that pulled me away from the computer until around 4pm and when i logged in, the exchange was closed)
  2. Crispy


    You will get assigned and you will have a margin call.
  3. Dael


    Please let us know what will happen on Monday.
    This is a tricky situation, and since there're many options traders on ET it will be useful to know consequences.
  4. dcvtss


    What happens if I’m assigned stock at expiration, and my account doesn’t have the funds necessary to satisfy the margin requirement?

    If an expired USD option position results in an automatic exercise (the Options Clearing Corporation will automatically exercise any stock option which expired 0.01 or more in-the-money), and the resulting stock position causes a margin deficit in your account, the account would become subject to immediate liquidation. Given that the OCC processes the exercise and assignment on Saturday, liquidations in USD equities usually occur shortly after the open of regular trading hours (09:30 EST) on Monday or the next trading day. Please be aware that any positions could be liquidated as a result of the account being in margin violation—the liquidation is not confined to only the shares that resulted from the option position. For example, if the account holds currency, futures, future options positions, or any non-USD positions, such products may begin trading prior to Monday morning and, as such, liquidation of any of these positions could occur in order to meet the margin deficit which resulted from an options exercise.

  5. In short, monday morning will prove interesting.

    Ill update once things play out. I hope nothing too devastating comes out of the EU this weekend.
  6. teun


    The stock can also trade higher on monday...

    The good news is that your position will be liquidated in a liquid market (10 minutes after market opening and assuming it is a stock with a market cap of at least few 100 million $).

    Therefore expected result = 0 (compared to selling options yesterday).
  7. Daal


    IB says they might autoliquidate before Monday morning. Paying exorbitant bid ask spreads on SUNDAY trading?IB is a fucking joke sometimes

  8. you will have 10 minutes after the open to close the position that is causing the deficit, or it will auto-liquidate the account or some portion thereof to cover same.
  9. teun


    Do you already know what happened? Stocks are up fortunately.
    #10     Oct 24, 2011