I'm afraid there's something I just don't understand about this conversation. What I think I understand is that you have in-the-money call options, but not enough capital/margin to exercise them on close. But if they're in the money, just sell them before close? Or sell enough of them to raise cash to exercise the rest? Note that "liquidate" in this context just means they sell them for you... you don't lose them or anything.
if the problem is cash/margin < cost to exercise the simple answer is if ITM, OCC rules are auto-ex anything .01 or more ITM
then you’d end up in deficit
but IB credit manager would automatically liquidate portfolio positions until the deficit was neutralized +/- haircut (buffer) depending upon portfolio margin, reg T margin, and concentration of assets within portfolio
the mid-day explanation from service desk may mean that they actually anticipate the credit deficit prior to exercise, and will manage it prior to close, meaning they’d rather liquidate portfolio positions during regular trading than after hours when liquidity is tighter.
i’d imagine this is a standard automated procedure and that they aren’t handholding specific scenarios like tesla inclusion for example. i doubt they have the manpower to manage one-offs, and i imagine other e-brokers are similar, or worse, they don’t even have automated credit managers
It's almost as if no one really knows what will happen It's already +2.5% premarket and climbing.
I hate to break the HODLer ranks around here, but I'm planning to sell 10-20% of my holdings between today and Monday. I "need" to buy a lot of expensive toys next year, and hell, after all YOLO, and you can't take it with you when it's all over.... And I don't subscribe to the people saying you will regrets selling and buying CyberTruck (for example), because in 5 years you'll say it costs you 500,000. Maybe true, maybe not, but whatever, I'd rather have it now and enjoy it, and not worry about where the price will be tomorrow or borrow too much against that. Who knows what will happen in future..
You could get a better price for limit on close order if the closing cross price is above your limit. If you just do a limit order, you can only get your limit price.
I have one position in $760s (a very large one), and a smaller one in $650s. I may decide I would like to hold them until late in the trading day. Especially the $760s, if the stock price is hovering around $760 or $765, I would likely prefer to hold them until a few minutes before close, and see what the closing cross brings.
Thank you for this information. This is very helpful. I will keep these things in mind when I talk to them again later.
I'll try to ask if I can put in MOC orders for the options. If that doesn't help, I suppose the best I can do is to ask for exact details about when and how the positions will be liquidated, and to then roll them over if they are ITM.
That is perfectly acceptable. So long as you're spending a good amount of it on something ridiculous.OK, since we're honest, after getting them back earlier this week, I sold 100 shares at 667 again this AM in prehours. Selling more up to $850, but keeping 2/3 for next year! No leverage, only shares. Market in general looks good today too.
This is fun!
I think the person he interviewed had a loyalty to the company and refused to divulge the truth about what he felt was going to happen.https://www.etf.com/sections/features-and-news/sp-500-etfs-brace-tesla-trade?nopaging=1
S&P 500 ETFs Brace For Tesla Trade
ETF.com Dec. 9 interview with Rich Lee, with whom Rob Mauer vlogged tonight. Many of the same questions and replies.
"But to your point, why wouldn't Tesla stock just run another, say, 25-50% given that everybody has to buy it? That's where having a robust and dynamic market comes into play, because there are market participants, whether it be proprietary traders, hedge funds or prop shops whose job is to look for these announced index changes and trade them ahead of time, and hopefully accumulate a position in advance of the index and be suppliers of liquidity.
The sell side is a liquidity partner in this endeavor. If we look at an index fund that cannot deviate, and it cannot trade early, if you don't have the sell side there prepositioning or accumulating position, you may have that scenario where the stock just runs uncontrollably to the upside. You want a robust ecosystem."