Are there commissions associated with option exercise or assignment?
The answer depends upon the option type and its region of listing. There is no IBKR commission associated with an exercise or assignment of US stock and index security options and out-of-the-money non-US index options. A commission is charged for an exercise or assignment of an in-the-money non-US index option and for options on futures. Please refer to the Other Fees section of the IBKR website for details.
What is the exchange minimum margin requirement on SSF positions?
Overview:
In the case of a long or short SSF, the exchange margin requirement is equal 20% of the underlying value of the contract (initial and maintenance margin)
In the case of a hedged position (e.g., High or Low Synthetic strategy) in which a clilent is long (short) a security futures contract and short (long) the underlying security, the required maintenance margin would be equal to 5% of the instrument having the higher current market value.
Will a long SSF ever trade at a discount to the underlying stock?
Overview:
When a large dividend payment is forthcoming or if the underlying stock is difficult to borrow, the futures price may trade at a discount to the actual cash price.
Why does a long SSF typically trade at a premium to the underlying stock?
Overview:
Single Stock Futures will typically trade at a premium to the stock price because of an adjustment for interest rates. The premium reflects the interest earned on the capital saved by not posting the full value of the underlying stock (adjusted for any dividends expected to be received prior to expiration).
How are SSFs priced?
Overview:
Single Stock Futures (SSF) may be priced using the following formula:
Futures Price = Stock Price * (1 + (Annualized Interest Rate * Days to Expiration/365)) – Present Value of Dividends due prior to expiration.
Example: On 12/12/07 MSFT closed at $35.31 and has an expected dividend of $0.11 with an ex-date of 2/12/07 (61 days). Assuming an interest rate factor of 4.5%, what is the 12/12/07 settlement price for the MSFT March 2008 SSF (97 days to maturity)?
$35.62 = $35.31 * (1 + (.045 * 97/365)) – ($0.11/(1 + (.045 * 61/365)))
Is a US Single Stock Future a security or commodity product?
Overview:
US Single tock Futures (SSF) are a hybrid product, regulated jointly by the SEC and CFTC and allowed to be carried in either a securities account or commodities account. IBKR elects to carry all SSFs in the security side of an account as this is the only way that margin offset can be provided against other security products (i.e., stock, options).
US SSFs are listed at the OneChicago exchange and are cleared through OCC.
Are there any particular risks that one should be aware of when using SSFs to either invest excess funds or borrow funds at available synthetic rates?
Overview:
While the High and Low Synthetic strategies are both hedged positions, the futures leg is subject to a daily cash variation of the mark-to-market gain or loss whereas the stock leg is not (mark-to-market gain or loss is reflected in account equity but there is no cash impact until the position is closed). If, for example, an account holds a High Synthetic position and the stock prices increases significantly, the resultant variation pay on the short futures leg may erode the account’s cash balance resulting in a debit balance which is subject to interest payments. The net effect in this example would be to reduce and potentially erase the earnings on the High Synthetic position
What positions are eligible for Portfolio Margining?
Overview:
Portfolio Margining is eligible for US securities positions including stocks, ETFs, stock and index options and single stock futures. It does not apply to US futures or futures options positions or non-US stocks, which may already be margined using an exchange approved risk based margining methodology.
Why is my Stop Limit Order for Globex listed futures contracts generating an error message regarding the price?
Overview:
The order handling rules associated with CME Globex futures transactions contain restrictions regarding the relationship between the order limit price and stop price which may not exist in other market venues. In the case of a Sell Stop Limit Order, the limit price must be less than or equal to the stop price (<=). In the case of a Buy Stop Limit Order, the limit price must be greater than or equal to the stop price (>=). Sell (Buy) Stop Limit Orders entered outside this convention will generate the following error message: “LMT price should be less than or equal to (equal to or better than) STP price
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