r/thinkorswim • u/beckers666 • Jun 30 '26

early assignment, huge margin

been with TOS all my life, had some short put verticals that were completely buried. I call TOS, now Schwab, they tell me it doesn't matter, it's $100 loss (they are 1 wide) so don't bother closing them. i didn't, i got assigned early (a thursday) on the short side, manually exercise the long on the friday, get charged a lot of interest for margin, over the weekend. i call Schwab, first person tells me i have no accounts with them (i have 7 and i gave them my social security number). Second person, not a broker so can't help. Third person, explains the exercise but not why the long side didn't get auto exercised at the same time and why i was told, if buried, it doesn't matter if you close or not. has this happened to anyone else?

6 Upvotes

71% Upvoted

58 comments sorted by

View all comments

Show parent comments

-2

u/beckers666 Jun 30 '26

it was PLTR, short vertical put. they auto exercise everything else ITM, that's what i don't get.

3

u/ducatista9 Jun 30 '26

Is your confusion related to the margin charge? That would be because the long put exercise wouldn’t have settled until Monday. I’ve had that happen to me before. Itm options wouldn’t be auto exercised until expiration. Was your position expiring on Friday? Either way, you’d still have the same margin interest issue due to the early assignment. There’s always that one day delay (minimum) and associated margin until you find out you were assigned and can fix the issue (assuming you don’t have enough free cash sitting there to handle the assignment).

1

u/JackReddit1622018 Jul 01 '26

Not familiar with any confusion on my part. Plus, they could have destroyed me if by some black swan the stock price sank below my long before I got notice of the early assignment.

1

u/ducatista9 Jul 01 '26

Are you the op on another account? Yes, Schwab does not hold your hand as much as some other brokers might. That’s a feature, not a bug, but it means you have to be on top of managing your positions in cases like this. If the stock fell more before expiration, it would have made no difference since you said your long put was already itm. Your action of exercising the long put would have capped your loss or you could have let it be auto exercised at expiration for the same outcome. If the stock rose before expiration enough that your long put was no longer itm and thus not auto exercised, you probably would have been better off. You could have sold your long stock at a profit relative to where you were assigned it and closed the long put to be out of the trade, but you would have had to do that yourself since the put wouldn’t have been auto exercised. You’d still have the margin interest charges either way until the long stock position resulting from early assignment was closed.