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Why did you/your clearing firm force liquidate positions in my cash account?  

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

Overview:

 

 

Position liquidations within a cash account generally result from one of the following two situations:

 

1. Fees:  The account incurs a negative, or debit, cash balance due to the assessment of fees for items such as market data subscriptions or monthly minimums.  As a cash account, by definition, is precluded from holding (cannot hold) a negative cash balances in any currency, the existence of a negative balance will result in our clearing firm force liquidating positions in an amount sufficient to restore the cash balance to a credit.

 

2. Automatic Exercise:  A long equity call or put option was automatically exercised by the clearinghouse.  In the case of US security options, the Options Clearing Corporation (OCC) will automatically exercise all equity options at expiration which are in-the-money by $0.01 or more (see OCC Rule 1804).  If this is a long put exercise and you do not have an existing long stock position in your account, the short position delivered upon exercise will be closed out as cash accounts cannot maintain a short stock position.

 

If this is a long call exercise (not offset by the simultaneous assignment of a short call which is part of a spread) and your account does not maintain sufficient settled cash to cover the cost of the stock plus commissions, a forced liquidation will take place typically upon the market open of the next business day. Again, this is due to the fact that a cash account may not hold a negative cash balances in any currency.

 
 
     

  

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.

 

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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