Tuesday, March 29, 2011

Option Assignment Fees at Think or Swim

This is yet another first for me where I learn the hard way. I was short 10 SPY weekly Calls last Friday. Based on the way we finished the day I decided to stay short even though they were .30 ITM and take possession with a short position of 1000 shares at 131. Over the weekend I was assigned two separate times for 5 contracts each, which means I paid the $15 assignment fee two times. I never noticed this in the past at Interactive Brokers because they do not charge for assignment. So something to consider for the future, I suppose it's possible I could have got assigned 10 times for one contract each. Wouldn't that be a bitch. Depending on how many contracts your position is, and for this trade in particular, it might pay to just offset your options in the last few minutes of trading and simultaneously short the stock.

11 comments:

  1. Jason,
    I wouldn't stand for that - maybe according the "rules" it is okay for them to charge you two assignment fees or even 10, but if I were you I would get on the phone and tell them to only charge you 1 assignment fee, and I will be very surprised if you do that and they don't reimburse you just one assigment fees.

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  2. Jason,

    Thanks for sharing that first time experience. I have not yet had an option put to me or called away. I routinely use naked puts with the idea of being able to own the stock at a discount if it gets put to me. I never put on any naked calls... the thought of it scares me.

    Good post

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  3. Sandeep, I did put in an email so I'll let you know what I hear. Trin, I also sell puts and have taken possession at a discount, but have never been assigned more than once on the same lot, so I guess that can happen too.

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  4. So below is the email response from Think or Swim. Does anybody else have a similar experience? Have you ever paid assignment fees more than once on your trade?


    Jason,

    Yes the assignment fees are $15 and if 1 lot assignments trickle in it is a painful experience! A few years back I was short a 20 lot of deep in the money puts and was assigned 1 contract at a time over several weeks. I was sure it was a conspiracy against me; and yes I should have closed out of the position!!

    Warm Regards,

    Don Kaufman

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  5. Never have and never intend to. If I were you I would call Ameritrade and demand that they either refund one of the fees, or if they want give you $15 credit for future commissions, otherwise you will find a new brokerage.

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  6. Hey Sandeep what rate are you paying per contract on options? Because I find TOS to be very accomadating and the rate that I pay along with the analytical tools that TOS offers is unmatched at any other brokerage.

    Just to clue you in Jason and I only pay $0.75 per contract with no minimums. If you are paying more than this then you need to get with either Don Kaufman or Tom Sosnoff about lowering your rate. But go about it in a friendly manner.

    Regards,

    Dominic

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  7. Dominic, I'm paying the same rate you are paying. I am a big fan of TOS/Ameritrade and have always found them to be very reasonable to deal with. I am very surprised by the response they gave Jason. I sell covered calls and get assignments all the time, on occasion as many as 50 or 60 calls. In all my time trading I have never been charged more than 1 assignment fee. On other occasions when I have felt that I paid too much commission for various reasons they have always been reasonable about reimbursing it. It would cost them virtually nothing to give Jason $15 of free trades to make up for his misfortune, and they are usually smart enough to figure out that it is in their best interest to keep him happy. So forget Don Kaufman, get on the phone to someone at the Ameritrade desk and they should take care of it.

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    Replies
    1. Just wondering... how many contracts do you need to trade a month to be eligible for that rate?

      Thanks!

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  8. I emailed customer service at Think or Swim and asked if this was standard practice to charge more than once for option assignment fees, because if so I would have to consider going back to Interactive Brokers where this is no assignment or exercise fees. Below is their response. So message to anybody following the blog who is trading options, customers are currently in the driver's seat as a crowded online broker environment battles for your business. Use this to your advantage, at a minimum make sure you are not being taken advantage of.

    TOS Reply:
    This was a happenstance error which occurred when our clearing firm had a break occur in their allocation batch.

    We'll have a $15 adjustment credted back to your account.

    Min Kim
    thinkorswim, Division of TD AMERITRADE, Inc.
    600 west chicago avenue, suite #100
    chicago, IL 60654-2597

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  9. Happenstance error, allocation batch error? Sounds like wardrobe malfunctions and misquoting myself.

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  10. I like listening to Don Kaufman (although after you hear a few of his talks, he seems to say the same thing over and over again). But in this case I knew he was FOS. Glad you got this resolved.

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