RUT Calendar

[Ozsmiffy 0]

Newbie question here.   I am using e-trade and when I entered today's RUT Calendar trade it wouldn't allow me.    On enquiry they said they do not allow this on RUT because it trades as European style and it could go naked.    i.e. on expiration it requires cash to settle.        I see that RUT is used often here and it will be difficult for me to follow the trades if this happens.       Advice?    Thanks.  

[Kim 7,513]

This is the most dumb excuse I have ever heard. In terms of risk, American calendars are much riskier because the short options can be assigned before expiration. On expiration, it's the same risk because American short options will be assigned the stock if expired ITM.

 

IB has a good solution: they automatically close the trade if the short options are ITM 15 minutes before the close. We will never hold that long anyway, so there is absolutely no assignment risk.

 

If e-trade still insist not to allow you to do that and you want to participate in RUT trades, I suggest changing brokers. Take a look on this discussion:http://steadyoptions.com/forum/topic/5-brokers-and-commissions/

[Yowster 8,046]

I used to do options trades at E-trade before switching to IB, but I do recall being able to use RUT calendars.  E-Trade has multiple levels of options trading tied to its accounts, so perhaps you just need to request your account be set to a higher level of options trading.

[Ozsmiffy 0]

I used to do options trades at E-trade before switching to IB, but I do recall being able to use RUT calendars.  E-Trade has multiple levels of options trading tied to its accounts, so perhaps you just need to request your account be set to a higher level of options trading.

 

Thanks for your responses Kim and Yowster.     I did specifically ask if this was "a level issue" and they said no, they would not allow this at any level.    Looks like I'll be moving to IB.  

[luxmon 228]

One more thing - double check that the option you're selling is the front month of the spread.

Edited June 17, 2014 by luxmon

[SeanM 29]

Thanks for your responses Kim and Yowster.     I did specifically ask if this was "a level issue" and they said no, they would not allow this at any level.    Looks like I'll be moving to IB.  

 

A decision you won't regret.  Strangely, I think it's quite common, and normal, to develop an emotional attachment to one's broker, and the decision to move your business is not an easy one.  I know I felt this way about my relationship with TradeKing.  Maybe it's because the successful investments or trades we make throughout the years are so closely tied in our minds to the platform on which they're entered.  

 

I started by cashing out only ~1/4 of my TK account, but it did not take long for the satisfaction of IB commissions, at levels fractional in comparison to what I'd become accustomed, for me to cease opening any new positions at the old broker, and moving funds from any closed positions over to IB.

[Kim 7,513]

In my opinion, there are three main things you should look when selecting a broker: commissions, execution and platform. Better commissions will have a dramatic impact on your long term performance. Tools etc. you can can somewhere else.

[rg4usc 0]

I use e-trade and was able to execute with no issues...

[Ozsmiffy 0]

I use e-trade and was able to execute with no issues...

 

Amazing.    Out of interest, what options trading "level" are you with e-trade.    I'm at level 3. 

 

Here's how I tried to enter the trade, was this correct?

 

[Kim 7,513]

Looks good to me..

 

As a side note, I hope you are not placing the order at the ask of 8.70 - the mid is 8.45 now, you should be able to get it around 8.50. Level 3 should be sufficient. 

[Yowster 8,046]

I just thought of one other thing, I recall having sporadic problems entering some spread trades on E-Trade using the "Option" tab, when I called support they had me enter the trades on the "Total Trade Ticket" tab instead and that worked for my particular case.

[rg4usc 0]

This is a copy of my order...i didn't get in at 8.70 and went for 9.

 

06/17/14 12 Option Buy Open 
Sell Open  1 
1  RUT Jul 19 '14 $1180 Call

RUT Jun 27 '14 $1180 Call
  Net Debit IOC 9.00 19.66
10.84 Executed Portfolios

[Ozsmiffy 0]

Looks good to me..

 

As a side note, I hope you are not placing the order at the ask of 8.70 - the mid is 8.45 now, you should be able to get it around 8.50. Level 3 should be sufficient. 

 

No, just "simulating" the trade to make sure I was entering it correctly. 

[Ozsmiffy 0]

I just thought of one other thing, I recall having sporadic problems entering some spread trades on E-Trade using the "Option" tab, when I called support they had me enter the trades on the "Total Trade Ticket" tab instead and that worked for my particular case.

 

First of all, let me thank everyone for responding and helping me on this learning curve.

 

I've just tried the "Total Trade Ticket" tab instead of the options tab.   Looks really good and easier to use so thanks for that.    However I still received the same error on either tab:

 

 

When I contacted the help desk, and was passed through various levels to get the detailed options traders, that's when I got the "european style" "explanation". 

 

So no worries.   It's a mystery why it works for rg4usc and not me but I'll start looking at IB instead.

 

Thanks everyone.

 

P.S.   Maybe it's because he goes for USC and I only go for Boise state?

 

Ozsmiffy.

Edited June 18, 2014 by Ozsmiffy