TD Ameritrade Closed out my options for big loss

Submitted by RockAndRollMeansWell t3_10mwodg in wallstreetbets

Hi,

Anybody else have this happen?

I had 25 SPY 404 Call contracts at the close of normal market hours. SPY closes at 405.70 today and I expected my contracts to be closed out at 3:15 PM (central time) at a near to market price. The after hours price in SPY at the said time was around 405.50 to 405.60.

However, TD Ameritrade closed out all my options at $1.10 per contract. WTF?

The bid on that contract was $1.40 and the ask was $2.26.

I just got screwed out of more than $1000.

Any recourse?

Thanks

5

Comments

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VisualMod t1_j65jz5q wrote

>You're a fucking idiot if you think Ameritrade would screw you out of more than $1000. You must be really poor and stupid to believe that.

18

css555 t1_j65s5dn wrote

They probably closed your position because you did not have enough buying power to buy 2500 shares of SPY. This probably occurred well before the close. Trade SPX options to avoid this situation.

9

fenriswulfwsb t1_j65mypj wrote

Ameritrade takes a while to settle options. I have several sold puts still showing up as a negative that expired OTM today. Give it the night.

3

DovesAndRavens89 t1_j66t6c5 wrote

True. Many times things will settle over the weekend. Also, if you don’t have the buying power they can buy and sell the security for you. Don’t know how much margin you may need but it could be possible.

1

BenjaminGrahamJr t1_j65liis wrote

I don’t see where the options have been closed out.

2

RockAndRollMeansWell OP t1_j65lq3a wrote

https://preview.redd.it/i5ee98o16pea1.jpeg?width=1162&format=pjpg&auto=webp&v=enabled&s=5617785134cec41cf85a417d6b2604b1b86e684e

Forced sale.

1

BenjaminGrahamJr t1_j65misq wrote

It looks like the expiration date was today. They would have to sell today or they would be worthless.

2

RockAndRollMeansWell OP t1_j65n4i9 wrote

They were in the money if exercised for at least $1.50 per contract. I don’t know how I got hit with a $0.40 haircut.

3

AlohaTrader t1_j69ek21 wrote

>if exercised

You didn't have the funds for your contracts to exercise so TDA auto-sold if for whatever it could otherwise it'd expire worthless. As for what price the contract auto-sold at, after-market contract execution is delayed so the price you saw probably wasn't accurate.

For this reason, you should manage trading your own contracts at expiration if you don't have the funds to exercise them. This isn't the fault of TDA but rather you goofed.

2

_ThatsMyQuant t1_j65yn4f wrote

There’s no recourse because you didn’t have the money to take on the full amount of those options. They do this to every account unless you contact them on Fridays and let them know you have no intention to exercise and will sell before market closes. It’s not a guarantee but it will buy you a lot more time (3:56 PM is the latest I had gotten to on an option expiring at 4:00 PM fwiw).

2

wake-2wakeboat t1_j660iou wrote

Spy contracts close at 1600 on the day they expire.

2

terminal_e t1_j662oz7 wrote

Your thinking is that TD should exercise the options for you, and take the responsibility and slippage of moving 2500 shares after hours for you?

If they do this on SPY, should they do this on Joe Shit the Ragman, Inc, which has options available but only trades 150k shares a day, and 13 after hours?

Isn't it clear that it is much easier for them to just sell ITM options positions at the market when you don't have the $ to exercise?

In my Joe Shit hypothetical, isn't it clear that the ask after market is likely lower than the close, and you'd be taking a bath because too much supply hitting too few bids?

2

IVCrushingUrTendies t1_j66i4zc wrote

Really? You don’t have the money in your account to exercise. Risk management came in and did the job for your dumb ass. You think there’s some person on the other side wasting their time using limit orders to fill you? No. A bot goes into your account and market sells all your regard positions and since it’s low liquidity after 4 you get slippage. Tough luck

2

jbotz29 t1_j670i9a wrote

That is not the actual bid and ask spread on the 404c. After the market close option prices are unreliable. Go and click on the details of the 404c and look at the chart, spy dropped into closing and the options were worth $1.10 at 4pm. I don't know when you bought them but they could have been closed at 3pm for $4.15.

2

VisualMod t1_j65jyi7 wrote

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1

RockAndRollMeansWell OP t1_j65krf0 wrote

https://preview.redd.it/3na53ymw4pea1.png?width=1170&format=png&auto=webp&v=enabled&s=b8005e63028bc4b5e419160b2898853f1a800e4c

See prices.

1

value1024 t1_j69keba wrote

You need to know how deep was the 1.4 bid.

It is possible that it was one contract and somehow the removed and the next best price was 1.1.....but I doubt this was the case because on the internal value of the contract being greater than 1.1....

You need to call them and complain and get your money back.

1

BadonkaDonkies t1_j6cqexy wrote

He did not have the liquid to take on the risk. They came in and mitigated risk for themselves. You don't get any money back here

1

value1024 t1_j6cynfo wrote

If NBBO is 1.4 by 2.28 an he got a fill at 1.1 then that is lawsuit against the broker, no matter what the net liquidation amount. Especially if the broker internalized the order (sent it to Citadel or Virtu or the likes) while the NBBO market was way higher. No fucking way a broker can or should get away with not offering NBBO to customers.

1

Billystep t1_j665scb wrote

That’s what happens when you use their money on margin.

1

WizTis t1_j6cy650 wrote

Why didn’t you sell them instead of TD doing it? img

1

eclectic22 t1_j65sfye wrote

No, they should have exercised them and margin called you for a cool 1 mil to add to the account.

0