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What happens if ...

 

I am assigned stock options at expiration and I don't have enough money in my account?  

If I do not have the funds necessary to satisfy the margin requirement?

 

Overview:

 

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, futures 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.

Background:

Account holders should refer to the Characteristics and Risks of Standardized Options disclosure document which is provided by Place Trade to every option eligible customer at the point of application and which clearly spells out the risks of assignment. This document is also available online at OCC's website.

 

  

Special Options Notes

 

Pre-Approval for Options:

Customers wishing to engage in transactions involving option contracts must obtain pre-approval by a Place Trade Financial Registered Options Principal. Approval is based on your investment objectives, financial information and trading experience provided on your account application. For additional information, contact client services at 1-800-50-PLACE.

 

Trading Options in an IRA:

Options are offered in all IRA accounts including puts and calls, covered calls and married puts.

 

Option Exercise Deadline:

The new deadline for exercising options is 4:00 p.m. EST. If you would like to exercise an option, please call a broker at 1-800-50-PLACE.

 

Options are traded on an online basis only:

Place Trade does not provide advice for options traders. When placing your order you must provide the correct option symbol and confirm that you are placing your options trade with the correct symbol prior to entering your trade - whether you place a trade online or with a broker


Margin Requirements for each type of Option Strategy:

Interested in Trading Options on Margin? Learn about the Margin Requirements for each type of Option Strategy by Margin Combination.

 

Automatic Exercise Thresholds
 

Equity options:

Equity options will be automatically exercised if they are $0.25 or more in-the-money unless instructed not to exercise.

 

Index Options:

Index options will be automatically exercised if they are $0.01 or more in-the-money unless instructed not to exercise.

 

If you maintain a minimum of US $100,000 (or USD equivalent) equity/Net Liquidation Value in your margin account you may qualify for a lower margin requirement and waiver of inactivity fees.

 


 

 

Get a free copy of the OIC's Characteristics and Risks of Standardized Options to read prior to investing in options!

 Download Characteristics and Risks of Standardized Options 

Options involve risk and are not suitable for all investors. For more information; please read “Characteristics and Risks of Standardized Options” before investing in options. For a free copy call 1-800-50-PLACE or 1-919-719-7200 or visit the OCC. There is no guarantee of execution. Orders will be routed to US options exchanges. 

 



Any trading symbols displayed are for illustrative purposes only and are not intended to portray a recommendation.

 

 

 

 

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