November 8, 2009
How do you exercise option using online broker such as Scottrade or ShareBuilder?
▲ßûІІѕ vş ßèāŗѕ▼ asked:
and also, is it possible to exercise your call options and buy the stocks on margin and sell it on the same day?
and also, is it possible to exercise your call options and buy the stocks on margin and sell it on the same day?
i.e. exercise call options on Scottrade purchase NetSuite stocks on margin and sell them on the same day?
Lucy
You can engage in the above arbitrage transaction. If you take a loss in the options contract, and then bought into the stock, this will follow the Wash Rule, and you will not be able to claim the loss on your deductions.
Exercising options contracts is the same as stocks with an online brokerage. Is there a specific problem you are encountering.
Some online brokers allow you to exercise an option online, others require that you call the brokerage to exercsie an option.
If the brokerage allows you to exercise options online, there will be a screen where you specify the symbol for the option and the number of contracts you want to exercise.Otherwise you have to call the brokerage when you want to exercise options.
Yes. You probably will get charged a couple of dollars of margin interest. You should have enough margin available to cover the purchase, or the brokerage may refuse to exercise the options.
If you are using Scott Trade, then you would probably be paying more in commissions to exercise the options and sell the stock, rather than just sell the call options for the difference. Most on-line brokers charge more for option exercise than they do for just a stock trade.
Make sure you aren’t penny wise and pound foolish on commissions.