“How I Fought ‘Theta’ All Week and I Suspect Some of My “Profits” Ended Up in My Broker’s Pocket.”
It’s a little thing I Can Call (sorry) “ The Do Not Exercise LoopHole “ All Your Broker’s Cash in On This.
- No this is not the afore mentioned ‘How they do it’, in truth Part of Your learning curve makes You Smart enough to get it done. But be 1 minute late? You Will Get Pounced on. You have Not yet earned this right to be free to profit from “Your in the Money” Options.
- In What way Can I be justified even to “think” You Want to Know about the Retail Trader’s Landscape in this thing? It’s the Allure of Trading Stocks. What the future brings. You trade stock and options, You will see it.
- The ‘idea’ that in the time it takes to Not Drive in to Work and Put Up with the Office Clique Or the Room full of Women, whatever. Stay at home and squeeze (sorry) $200-$300 out of Wall Street on Trading stocks and options. Ain’t a Bad idea. Numbers of traders will grow bigger.
- Some of the better experienced You know the guys You generally Call at Your Broker as a newby? At that time boy are You a sponge… any unused first heard term is a magnet for Your mind.
- After all you have all this money sitting in your account and You have not a single ,two or any clues about the hidden worry and traps that awaits You.
- So Yes doing this thing is a risk and You need this money in the trading accounts to do this however. Nothing new there. You can trade a bit differently when your account is over $25,000. No small feat there for the average Joe.
- What about the average Joe who Combines all of his 401K and Pension money into ‘investment’ accounts? Who should be their manager? And, if after Privatization of Social Security, that monthly check is now to be included. A do until die thing, or have nothing to do with it (trading in Your own accounts). That means 100's of thousands of dollars.
- On the surface If I bring up Motive or Say what I think brokers are doing and it sounds shady. Then isn’t that something that helps them by folks then choosing to let brokers manage more accounts? My point is if You do that the piece of profit they pass on to You would that be small if compared with getting a better platform from them to use trading the Market?
- People write books on stuff on how to trade. In different styles. It’s just easy to go off thinking it isn’t worth the risks. Hell, One doesn’t even know why most of the risks are even risks. How as a Retail trader much more ‘veil effect’ hovers over him. Many more veil effects hover? What ever!
- I say learn and burn the barriers.
- My Peeve is at the next higher level. The next layer above retail. Your broker and the broker’s trading tool You will use. In my other 10 Articles and without ranting on Broker ABC I have written many things.
- Rather hit on a few key suggestions for You, if You can believe me. And, it is not very strange that in society the Ways others will try to separate You from Your money. It’s like that here (trading) and You can freely go or stay. Just don’t think that keep trying with the same platform format means You haven’t yet found out how to win.
- Consider that there is a Flaw, and it is against You and Winning here.
- The action is in itself a kick. With Your brain sending the body endorphin on even situations You are ‘in wait’ with. When You haven’t put Your money in Yet. But, Check. Your entry is very circumstantial for You. Important not just circumstantial as like being a weak series of incidence. Circumstances with how You’ve learned in trading, are put to bare in the style of Your own. Using a Flawed system? Only keeps making Your search impossible finding the better way.
- My Peeve is “I Can Justifiably Ask For Certain, If the Trading Programs of today stand Any Chance for Raising the regular Guy Retail Trader’s Chance to Win” ? Or is him being a loser the Objective for A main option and Behavior. Like a Dog on a Leash.
- There is only one concern I have on trading using broker provided programs. This article is more a anecdote. Just consider the organization behind the scenes and the choices and actions Your broker takes with You on your journey.
- Hold in Your head a logical step and strong defense for this. Your Own Mistakes are Your Own that You Own. No one does or Will decide what’s best for You trading.
- Even if You would like a ‘good tip’ at the broker He Can’t Shouldn’t and Won’t go there for You. I Mean if You loose money, You can try to blame him. It doesn’t work at all.
- But should we not question and have a say regarding how the platforms do the job for us? They being a public corporation and Your only avenue ( street, but then I’d have to say ‘sorry’ ), to trade is to use it.
- Even to say some stuff aught to be on a ‘standard’. Yet TBD. Definitely only ever getting done as an organized group. IMHO. These 11 Articles are Why I Support Why and How.
- So are the real points to me writing these articles published here.
- So not to lose You I am going to take a writer’s leap now. Your Broker Will take Some Action in Your Account and Not be obligated to Give You a Call (sorry) on the telephone ahead of it. But I disagree When it means You lose the opportunity to have profit, and question not only with an alternative ‘no additional risk on them’ action and to back that with some positive feedback learned from a ‘restriction’ on a trader’s account. ( No There is no remedy in being slapped with a ‘free ride’ or anything similar When leveraging risk using options).
- But what happens in between Friday close and Monday open can influence Your Broker’s treatment of You while You own options that are in the money on Friday.
- You are however being trained to think that is what can be seen as a simple solution to a free ride but with “a simple explanation” sets You on the course of obedience. This Article is my sharing of thinking it through. Read On.
- Such Similar Non Defendable Got it ! Sorry Just Wrong ! These common mind traps and sorted out is possible using a committee putting forth the call for a standard practice at any brokerage house You choose to trade with. To be part of being with A Retail Trader’s Association. Or go without…….Program Changes , Policy Changes. In other words as the Trading practices change Yours won’t. Not Good.
- The best traders sometimes have the best support people or otherwise. Retail Can also get organized around what is behind trader issues, with out representation, independently hasn’t enough sway.
- Consider this “What Price Do I Pay For Stock that I ‘Put’ to Someone” through Exercising My Options.? Your max price you can receive is the option’s strike price. But what price is the stock I must sell Was / Will Be My Cost When between Friday Close and Monday’s open comes a calling. If overnight events drastically change the value of the Company?
- Here Supposing that Your account will support owning the stock. Or the difference in the spread strikes, even if zero.
- The answer to that question floats around. It isn’t allowed and it is allowed given Your account’s net worth. You will get someone on the phone and it will depend on whether that person knows what the real answer is. It will depend on if You call on Friday, Saturday or Monday about the exercise value in Your account.
- If it is going to be more profitable and less risky for You vs. the Broker, then of course Your answer will be the “ambiquious” like this, “The CBOE sends a report out to All brokers about which stocks from which brokers are being assigned and those brokers randomly select from their clients, da da da da,da. “. You end up getting the shortest end of the pie. Umm stick Umm piece….
- If the stock moved “x” amount come Monday pre Market from any time from Close Friday, there will always be something about a “report” and You don’t have any way to dispute what they say it says. What they say they will let You do just depends on how much wriggle room they have for You that they can wriggle away and make You come out the worst while they come out the best. “And the winner is!…..”
- While the stock price absolutely is. . Just check it.
- What follows is some kinds of cases, that Your trading program allows and during the week fine with no problem, but on Friday expiration day there is that time window which opens and the BS that You need to reload. It will happen to You.
- This rep told me this, this rep told me that. Who knows these days on this, if it will be them or You, It will be them if they have the final say. And they do. You’ll reach a Senior Trader that can tell You for sure.
- If Your position is making you money ( in the money) and your broker chooses one and only one way and unconditionally forces you out of that trade Which means you do NOT take the profit? Should We go there With some vague or a Consistent understanding?
- Your broker will say that on Friday Option’s Expiration day there are just so many accounts in this condition, and with the limited number of people to be taking these risk management steps, that it is just impossible to call everybody. Ok. That is agreed on logic.
- But is there another way? And in that way as a trader I don’t have to lose and also suspect that that winning position is now paying profit not for a taker of the other side of a trade as in order flow to the market but with a Broker’s computer program that puts that position in the plus column on Your brokerage’s owner’s behest. (Ok, nested possessives’ coma usages , guilty).
- But that’s What they done and How they do it. Not Your everyday Contention, and impossible to prove. But hey, we are all here concerned equally about the “risk pool” to being a loser….Since this article is not about car insurance… no (sorry….)
- Should we see this? Should we want it? Should we be given it? Consistent Broker Behaviors Annnnnnnt%#+*;/&$ TTTT DENIED. Consideration for No Change on grounds that we don’t care, don’t care how much you care and how much you think we should care.
- Hey Wait Can’t this issue already be something my account can afford? This type of position is just like the already existing and commonly associated with using broker money to pay for stocks then selling that stock at a profit. Refered to a ‘free ride’. But wait that’s a cash account term, this trade is in type margin. Better right? You give me ‘margin’ and day trading buying power to open close open again with the same money. These spreads are within my account Margin requirement. Yep, while an option but not the stock replacement amount. Oh…….Ok.
- How about I make sure to have uncovered stock free to trade out of to afford me the money to close this threatened in the money assignment or exersise. There’s a Work around with a flexible and supportive broker. The trouble is always Who stands to Profit You or Them?
- You can have this free ride-esk scenario by going into a spread by legging in one leg at a time at the best time for You and have enough dry powder to sell some stock to “cover the spread”. You buy at 11 and sell at 11 at a later date, or at 11.50 for .50 max profit when both are in the money. It is that lot at $11.50 that they don’t want in the money and open at Friday’s close. Stock sky rockets on news over the weekend? The long leg has got to be sold if the short leg is in the money before expiration. Closing the short leg only is now very expensive. You can’t be naked in an IRA account! But if Your broker is flexible come Monday Your max profit is .50 on the shares if both legs just expire in the money. Or as is the case of a call expiring in the money the stock can tank and be worth much less than the strike price for which Your cost is, when disposed of on Monday You incur an unlimited loss. Disposed of since You don’t own the stock after the options expire until You pay for them.
- Keeping these in the money options from ending up as shares in Your account becomes a battle to hold onto Your money. Mainly because of if You wish to buy at the long call strike and sell at the short call strike then what will be Your possible reaction when only the long side and not the short leg expired in the money.? Perhaps both long and short leg expired in the money. Well, Following a move on news after the close? But on Monday those shorted shares now show a huge loss? Can happen with any held position over the week end or even over night.
- That .50 is the difference of the strike prices. You can at any time limit Your gains while protecting Your loses and make it very much stress free such that You don’t care which way the stock moves. Using spreads only with out owning the stock. A move down is a loss in the value of the stock if You owned it.
- But The Brokers just don’t let You keep an in the money open to expiration, while managing is only allowed under stress or not at all. As Your broker puts an auto close claus on You as the day starts to wind down, which happens to be when You stand to gain the most. Sorta like raising the incline as You run on the exercise machine (sorry).
- Trading in option spreads means one leg is insurance for unlimited risk! Only while the options are not expired. If turned into shares and sitting unsupported in Your account, Nope can’t have that.
- You can even have all that there plus have received a high percentage or all of the debits You pay for long options in these spreads recouped by credits received selling short legs in the spread.
- You can build proportional calendar spreads every week built on the “far dated” long legs You pay to open. People and options strategy are numerous in how they work. Spreads Can pay your account weekly income. Therefore having more freedom to employ them is a good thing. A concern when the clock dictates that You get out of the trade instead of the trader use of that time in the trade.
- Options expiration day is the real ride. Where You may get paid. The Brokers stop You there, with the handling of “in the money” positions.
- Our Brokers take the good for us situation of being in the money put a unfair policy during the best time being in the money and Yank Your profits by requiring us to close those positions before they have settled down where Closing them by choice is the most logical.
- What they have is a set up and free reign to force You out at the Market whenever they want.
- This list may as well be a filter on the market of people making money, meaning look there for the profit in the Market on the best trading day of the week. Figure out how to meddle in the retail account, and sic some internal system on those folks. Folks having no alternative but to turn over their trade to “Who the hell knows”.
- Ok. Now we are where Your Broker Says that they are flexible, until they aren’t and especially for a single squeaking wheel looking for said flexibility based on reasoning a way to maximize a winning trade on the day. So….. The money is better in Not My Account?
- It is what it is. First the broker helps to school you the rules, You like to make good stuff happen for You A whole lot more than it generally will, You are facing the nature of Wall Street and in Your way down and low position on the Wall Street Landscape. Then You get figured to commit a ‘heinous’ act, they force You out because of trumped up risk. A technicality built on Your perceived lack of seeing into this? And this is heinous and unreviewable? (As stated the best hope here is to be allowed to continue to hold open for max profit and be clear to exit before the bell). Quite the opposite of what they will let You do. Brokers that take 100% and give 0%. Try using Your Leaps that are out of the money in a spread when the option chain shows bids coming in. They give You no credit that for the short to be in the money Your long has to have gained as well. Without that meeting You part way, You just don’t get to use out of the money leaps for anything at all. Theta just eats them away. Broker 100% take. Give 0%.
- All the while as the trading and minutes click down to the close, You are racking up money off the delightful leverage that options allow, the lowly retail small account value, a looker for $2,000 on the day to make Your monthly nut, ‘brilliant move’. Bam forced out!
- Yep it’s something your own rep would do exactly the same. You? You are on a watch list, in an organized firm that can in bulk sense a winning trade from a winning trade and sits like a vulture waiting to force You out, and for no good reason that I can see. Read On.
- When the spread’s legs have small or no difference between the strike prices is exactly when the Friday entire day action comes into the game, not just from 1pm to 3 pm or 12:30 pm to 3:30 pm. The whole day!
- So what gets You going? You first have to qualify for options trading. You have to reach a various option level like level 1 ,2, and level 3 to put on the different strategies require.
- So why is there no I can trade up to the bell level? Like a Level 4? I mean trading professionally as in everyday all day is not a foreign concept. A trader with knowledge of complete meaning of his positions relative to the day and time of the day every day is not up and gone. Not on Level 4! Hey Cleme, I’m level 4 with clearance to not be a big red flag on a risk group report organized to harvest Your prime profit’s time slot. Let Your broker go to the head of the line and eat the best there to eat. Ok Cleme. Ok.
- Yep if Your on it and You must have done something right to make money, if they can pull out the rug and get very vague they are really only exercising their right to “meddle in Your account”, tweek Your position into their own position….. Benefit when the things on Wall Street are chugging on like meant to be. Except You don’t get to play. All opportunities requires some experience and skill to even glean from the info we have.
- You can have the means in your account to cover the price change of the options they limit You to have and hold, though not the necessary means to support having ownership and full value rights which the total lot of individual shares they represent (100 shrs per contract) but You need not have those means. That’s Ok You understand that. Your Level 4! But hey 3:01 3:02 pm those trades are programmed by the broker’s Systems. Programmed to do these steps to read, analyze, step in front of, and Oh no, don’t create a market themselves…..snatch them. No not into an internal ‘scrubber’ that gets deleted after the bell. Money not tucked away. No! Try to follow that money!
Do You or do You know anyone that chooses to leave “money on the table”? There was a time the brokers called me almost everytime. Those were the days when my account balance was at it’s highest and my knowledge was at it’s lowest.
Around the time I began to be smarter I had paid for my education. Gottin’ to be a bit more an activist for platform change but that was still Ok. I had not been trading and making good suggestions for to much of a time. Not a stone in the sneaker, for to long.
Brokers started picking up on my vigor or fervor for what I perceived as ‘good stuff for me’ potential bad signs for brokers from a client. I became ‘risquette’ , off color, persona non-gratis….. Perhaps gloated for my natural response of being mad? ……………Bootable and Booted.
Yep saw my opportunities , communicated to the broker my understanding for the change in price of the options vs. the ownership and relative change in it’s value out weighing a fraction that I could support, by trading options with little or none difference in strike prices.
Met with the fact it is to late to defend Your reasons to hold, got a bit pissed off. Would You be if You could have kept $2,200 by just closing out some in the money options? That is my personal experience watching a stock continue to pay after the brokerage forced me out! The leveraged gain on a small debit paid for long puts, put out my hands on some kind of broker BS.
I bet there is a system based on doing exactly that for the short haul, and for sure because retail is not invited there. Broker’s Rules. Sorta like the greatest new product in plumbing or natural gas conduits but only available to licensed ‘plumbers’.
Here is the true nature of the Stock market. The stock prices are Arbitrary and What matters is the changes in the daily price. As many times as possible in a single day. The Marketeers have increasingly wrung out the incremental moves in the stocks that algos are doing nearly all the trading.
The players have their attention glued to terminal programs that sense more substantial and effecting trade probabilities in names all over the Market simultaniously.
They put their entering testing algos on them and find support on volume for the next fair price. Surplus Volume, Extended depth of Book, ECN tracking, heck some days they just know where to look out of yesterday computer analysis. The less they miss the more they make. What is in Your retail tools box? Anything not just for the published and lagging kind of data and indicator of what ever? No……?
You have to battle for anything which increases Your ability to Win, because they don’t want You to get there. So You’ll let them manage all Your future accounts, including Privatized Social Security. They won’t sign off on something they don’t want to lose. Control.
There is little risk that the well equipped investors will be at risk for several reasons, unless a change the day day hits. But they have ways to keep even these from coming, no doubt. An oil spill a mass school shooting? Oh well just the way it goes. The pros will make all that which went against them back. Rest assured.
- This writer has Worked rather perceived to work with one broker for 5yrs. Being silly honest Silly open on much going towards a better trading program. Now over learned and under wanted, so on May 20th my broker kicked me to the street, now they don’t have to take my calls anymore. I told them, they would be better off with me there. Of course that means I mean financially better off , but couldn’t be so it don’t.
- Yep I said “Make a better user friendly program and You (broker) will attract more retail traders. After all that is what You do. A Retail Broker. Ummm. Hint:they don’t really care about retail. You get gammed. The proof is in the pudding…. Because two things being true for opposite reasons can’t both be true. Logic in my view point.
- So, am I right and true? You decide. You Decide.
- What would stop Your Broker from getting ‘in front’ for his own benefit, re booking Your trade to his trade once he forced You to close, I mean closes You trade for You? Impossible to prove, and I just say it. Closes a trade who’s character is harmless as risk to You and the brokerage? That is Profit for Profit’s sake. Not many will fit but I say mine sometimes do or did and such aught not fly. Because these wins are increasingly rare With retail.
I say any problem is either a befitting restriction or just could be at the broker’s discretion he does You a work around. Or, You trade with the appropriate level of “Level 4". The non-existent level 4. And, it isn’t against otherwise out of his hands rules of Finra. I say let them be a reader here, nothing changes.
What does matter is You lose money, somebody else gets that money and only with specific care and procedure checks are made that keeps this same Sheite here: from going on down a “do not exercise” list at Your organized brokers doing this every Friday as found. Some kind of Fixed Broker Monthy Income…..Like they need it!
They will check these lists for an opportunity or Your name goes right in the list just from Your own phone call in to the brokerage. Give me the ability to be a better trader, by not handcuffing me.
Qualify for Level 4? Off the red flag Dump list in winning trades.
Most of this Article is defending an Ability to hold on to a Winning trade? What about holding on to a losing trade in a short leg of a spread? Well if it isn’t a naked short, then the nature of a spread says You are limited in Your gains by the spread in strike prices plus any credit You collect minus any debit the long leg cost You.
My Peeve is with being cut from Maximizing a Winning trade on some technicality. Which when comes into the picture is ‘nothing but what aught to be Great News!.
- Just two things must be in effect. 1) You have an option position that “is in the money”. 2) Understand that You Can’t trade on stock You don’t own. Therefore trade at Level 4. Wait…..
- They are alway going to want to close You out of the long or the short from different reasons related to requirements or both legs in the event of assignment or exercise. Having this list blocks You from realizing from the movement in price in Your favor options that get close to getting in the money.
- If You opened an option position early in the week and it is already in the money come Friday, that is totally separate from what You have to deal with as options go from being out of the money to being in the money at 3:01 or 3:35. Are they going to miss that? Prolly not if they have the computer screening the live action. Bing, in the money ,not on this do not exercise list, Bing! Out. And why or how could You be.? The stock just moved in Your favor. More of the same, bang you down when You have a chance at a win. It gets OLD.
- Brokers have retail coming and going all over the place!
- So now there is one enemy the closing bell. Before the bell your option option position gives You the rights on change in price but not the full dollar value of the shares represented by them to operate with.
- If at the closing bell You had not closed the option then the shares and their full value not merely the price change in the option contract is bearing on Your account’s supportive ability. It’s Value.
- If You have NOT paid for the shares ‘sitting’ in Your account You are NOT the owner. You will be responsible for any risk that a market change that produces a change in the market value of that company who’s shares are sitting in Your account. If that risk You can’t support then the broker is at risk due to that inability. There is where your broker has ‘opted’ to take You out of the trade on his conditions, and that is not negotiable.
- So Why is I now stating two sides of a supposed single point of view? Bcuz of the nature of Wall Street trading and which sense the retail trader takes to be a strategy in trading the account. If that goes against Your broker’s comfort zone, actions happen.
- Get that Brokers, if we as retail traders act like real traders do even as You do Yourself and lend support to Your own desk traders with Your support for those positions, Why is not a Friday that goes with our position, or our ability to recognize a trade becoming an opportunity are our hands tied? I guess a power failure, a heart attack, wait what about a conditional order or an order that triggers at 10 minutes before the close. Something built in that You can agree with. Made so we can work into the close?
- In my personal experience I called You after getting forced out. It was all on me! That day over $2,000 as the stock was sliding down into the last hr. I was getting ahead every penny the stock declined. It was the way the Marketeers had the close to go. For Others on expectation I , had mainly ‘lucked out’.
- There was no plan I was party to, some who win some will lose. Scaled up! Me in the trade that day, on Friday on weekly expiration participating in the forces and it’s duration. Then Bam!. Forced out. I called to say when told “the option was in the money, Your account can not support owning that many shares at the market”.
- I said “Right, and I would have sold the option before the bell”, said “was it I had a bad plan?”, said “Wouldn’t You Do the Same?”. “Damn it I’m a Level 4 professional daily trader.” Yes also will day trade to, but by daily I mean everyday all day. To bad there is no such level though eh???
- Retail has got to be right twice, the Pros get paid in advance. If You have made a trade on the right side and made .10 the Pros have made $1.10
- So lets see here. The Friday pin is coming in. That time of the day. You already get in early and things are working. Wow! Options debit paid within Your day trading limitation which says, ‘You are able to day trade this position without incurring a day trade violation.’ Pretty much on cruise control.
- You sit and wait for it to show profit. Hell You could have even got into this position on Monday and “fought with theta” all week. Seemingly a good trade since it is holding up to ‘theta’ too.
- What do you brokers say I should do? Lose a trading day and exit before the action on Friday? No. Ok. Lose then the last hr. Or so….? Yes. When the action on the possible pay out for the trade will likely anyways be going to be happening into the last hour.
- Makes for better folks to share the wealth. When Pie flies in the skys!
- What have I wrote about losing money? The Market does the opposite of what You think it Will. Then won’t stop doing what You think it can’t.
- Good trades that last longer than 10 minutes now are hard to find. You get scalped and have nothing of a meter to sense the testing and the directional volume from the pressure, to rise or lower Back , break either way. Because no function isn’t lagging in Your platforms working in the Published Market to boot! Or the one bit that can be useful for You is missing or not used well or even at all. Half Blind, Stupidized… made To be Silent as in un listened to. YN maybe so?
- Your suggestions on a better trading platform, have gone unheeded.
- So retail sits at the bottom of the food chain. With the least resources. Using a crap trading platform. Gets forced out when making a week’s “nut” from the trade of the most probable time to move. Then You the broker gets in front, magically transferring a win from me to another initial , back to zero change other side of a trade, or A Broker Managed, managed and organized internal system as the trade analysis shows You a win, and is only limited by where it stops paying.? I’ll go with into Your internal front running system thankYou if You have one. If You don’t You haven’t made one but it is on Your to do list……. Are retail traders really so stupid Brokers?
- So is it right that I leave open this position for more closer is the end of the day and the closing bell? After which an open option Put closing “ in the money “ means all them shares ( 100 per contract ) come Monday show as a long position in the name in my account and unpaid for? Shares that I can “put” to someone at the strike price, all I got to do is Buy them at the current (lower) market price then Put them to the seller of that put in the next second through the magic of my Broker. I was the owner of something on Friday, for the change in price being the profit. The “money on the table”, that I didn’t leave there AT the table on Friday. The option has expired…….
- Wait! If I closed the Put by selling it for it’s intrinsic value (all time value in the option is gone since it is expiring leaving no time left), closed it at the market price, I get to keep the increase from what I initially paid and there is no issue on Monday about going to the market, acquiring the shares then putting them right on someone because, the stock is set to open from Friday close at “some price Yet to Be Determined”. Sketchy issue dead as the option is closed, risk of an overnight move undone.
- Did I get that time Friday to do the best I could with the position? Why are we doing this? If that position continued to pay out, who seen the profit? Starts with a B ends with an R…..that is my guess. Opportunity. Yep I don’t like watching all week as nothing much happens. Come Friday a potential at having some profit , That day is only a partial trading day!
- So if a stock is set to open Monday higher than the strike, and I owned a Put that expired in the money,then that is bad for me! (All I can receive is the strike price no higher). True True True. I can say “get it done in preMarket” but that won’t do, suppose over the weekend….. The company released news that sky rockets the price. Now I must acquire shares at the Market and can only receive the price set by the strike price when the option was contracted. All right and Good. My risk like that, becomes Broker risk if I am not good for it. Good for me if the stock were to go down bcuz I would realize either the closing price or the market price, and that is what the broker would tell me, I doubt if I would be allowed to share in that difference. Say if the stock closed at $12.00 on Friday and opened at $8.00 on Monday. If The strike price was $14.00 does the broker pass along to me $6.00 or $2.00 per share ? No doubt.
- After all there is that CBOE report and all the vague and random entries, there that We traders don’t see. Take it with a grain of salt!
- Which ever way it were to play out the chances of them different scenarios happening are not known. Therefore risk winning or owing uncovered dollar amounts are since I as the account holder do not own the stock outright. That’s Fair.
- So everything hinges on whether I can support owning the shares in the event bad stuff happens, or if brokers could be flexible some how to change the way they force out folks in trades on Friday. Yet what was the spread’s strike price difference? Little or none? The options do not both expire on the same day? How are You treated by Your Broker? Factors Factors Factors.
- I say for every in the money long or short position forced out by a broker means that when the prices continue to go in favor of the trade, there is more money you don’t see but he could. That trying to change that is next to impossible. But understanding the why and how is a benefit to trade practices. Comes down to a perk for the broker. Something he won’t give in on change. Got to give him that.
- The striking union member representatives do not sign lightly on the dotted line. Bcuz every gain in benefit written is the next target the company wants back from You in the next contract.
- But there is something he does allow on Friday. You can call and say “Do Not Exercise” good for the long position that is in the money. Any time the stock price is better than the option strike price, it means You are winning, therefore “in the money”.
- The risk group do not look at much else except what is expiring that day and in the money too. To them it will escape them that You know Yourself that rather than choose closing out a spread having appreciable time value rather closing the short or in the money leg expiring would net You a better return. After all You set up the position. You get what is the better choice. To risk group report handlers, it is by the book, no focus on off setting legs, no call warranted, move now! There is no ability to call the broker about not assigning You the in the money short. You will be assigned.
- But what if I bought everything right. Collected everything at the high and am willing to close a spread with time value left.? Because I want to move on? On the list, not Anything to reason on. Have control of. Umm. Fair?
- I say that can be changed. Changed because a lot can transpire in the last trading hr on a Friday. Stuff happens. That any edge retail can find and it working is rarer and becoming rarer. This could become a Committee issue. In fact anything the brokers consistently push back on the chance is that they have motive, and they just agreeing on making a change in policy or format of the GUI isn’t going to happen. Given in their own language or not, they won’t think on Your behalf. That is Them being Consistent.
- Saying “Do Not Exercise” leaves You with the responsibility to close the option before the bell. No conditions. If You don’t You can’t move to the “Come Monday” theme. The option is expired, there will be no opportunity to assign or put or supply or purchase then resell shares in quantity measured by the one contract equals one hundred shares formula. “You can’t trade with shares You do Not own.” And that includes buying or selling options against or for hedging these unowned shares into the now current five trading days in the week.
- Not closing a Do Not Exercise option leg before the closing bell, leaves Your in the money profit on the table. Not to be credited as Profit.
- “Do Not Exercise” is it for the long in the money scenario. So and most important is You can not say anything to stop an unsupported assignment from a short option position. Like this. “ Do Not Assign”, so that bit goes over the bridge, there isn’t the same work around. But there is a But….
- Your short is in the money. It is Friday and the stock is Sliding further and for every penny the options contracts you are short make You money, Nope. They just become worthless, cost nothing or increasingly little to buy to close. That is Ok for You. But the but is Your broker can force You out of any in the money short options You own, before the close. Since the short requirements are larger than the credit You received. Set one up that can be day traded? Eats up a lot more allowed intraday buying power than several long debit payments the other way using the same piece of Your intraday buying power.
- Every tell tale fact of the way a position starts to pay, in options especially bcuz they are max leverage, and are most volatile on Friday is true. Yet Brokers are able to get in front of these shorts the same as long option positions that are making You money.
- They can and will see Your opportunities either way and take Your profits from You. Tell You different flexibility allowances and it Will depend on Your history with them. You fall out of favor? You are ending on a fast track out. Continue to hit Your points? You are Booted. .
- With regard to having an opportunity to hold till the end of the day, or last five minutes? Short position vs Long position,
- The difference is one has limited profit while the other has unlimited profit for each side short or long. It depends on if You are a seller or or a buyer. The arguments are with how much can Your broker be free to do in Your account? They say anything is in their power after 3pm. So the last hr isn’t Yours unless on long positions you have said “Do Not Exercise” when if short they can just go in and force You out, bcuz You can’t have control on being or not getting ‘assigned’.
- Assigned is what You do to the other guy who is a seller of The Long Position. Exercising a long option becomes an assignment for the seller (his short position) on the other side of the trade.
When You choose to trade stocks and options there is technique and the technical. Emotional and at times Complete No Control. Dumb and Clever. Your feedback is What it is from the Trading Platform. Know that retail is down down on the special person ladder, is at the border of down right taken to the woodshed abused and used. Should We also be continuing to trade without questioning the quality standard of broker programs. ? And, kept out of the loop with making changes? Not Good Stuff!
When Will current events have connects With Financial Services, Infrastructure of Government, Human interests in Entertainment, Human Nature in Education and Wall Street? In Such a way that Fact Follows Fiction ? When Human Interest meets Human Nature neither having Arms Legs and Digits?