9. Other FAQs for Investing in Options
What is the minimum trading unit for a US stock option?
The minimum trading unit for US stock options is 1 contract, which is generally equivalent to 100 shares of the underlying stock.
For example, a call option of SPY that has an expiration date of April 8, 2022 with a strike price of $195, the current price is USD2.1 and thus the contract value is USD2.1*100 = USD210.
What is the commission fee for options?
USD0.95 per contract with a minimum of USD2.99 per order.
Are there pre-opening and post-closing market sessions for US option transactions?
No, US options trading schedule is from 9:30 – 16:15 (EST), Monday to Friday.
When can options be exercised?
Exercise on Expiration Date: Option contracts will generally be exercised or cancelled after the close of the market on expiration date; if the expiration date falls on a holiday, the exercise or cancellation time of the option contracts may change. Please refer to your order details for more information.
Early Exercise: This type of exercise right applies to American options only. But please note that, Tiger Brokers does not support the right party's (the buyer) early exercise of American option. However, the duty party of the option, i.e. the seller, may be required to settle the underlying asset if the contract is exercised early by the right party, i.e. the buyer.
Can option contracts be closed at any time before the expiration date?
Options purchased prior to the expiration date, no matter long position or short position, can be closed at any time during the trading session prior to the expiration date at market price.
On an expiration date of an option contract, how can the in-the-money option contract be settled if no action is taken?
Automatic exercise will occur for the account that option contract is expiring at a price $0.01 or more in-the-money at expiration. However, if a customer's account has insufficient margin to exercise the right then the contract will be closed at a market price. If due to the reasons, such as illiquidity of the market, or other uncertain issues, resulting in the option contract cannot be closed immediately. Tiger Brokers reserves right to inform its executing broker to render your option contract void, which means you will loss full value of the contract.
What would happen if I purchased an option contract (put or call) with the value less than $0.01 in-the-money at expiration and no action is taken?
Under such scenario, the option contract would be rendered null and void. The loss would only be premium. In fact, if you take action to exercise the option contract, which would cause your loss more than just premium.
Will it be recorded somewhere in the Tiger Trade app if my option contract is rendered null and void?
Yes, the details will be recorded in your order records.
- Why is my order not executed?
It may be the following reasons, including but not limited to:
i. Quotations from different exchanges are not synchronised.
ii. Minimum price fluctuations of exchanges are different.
iii. An individual buy/sell order may not be filled due to Spread Orders.
- What would happen if I am unable to meet the margin requirement?
Your account will be monitored by our risk team prior to the close of the market to ensure the account has sufficient funds available for the purpose of settling the underlying asset after the exercise of the contract. If your account is unable to meet the margin requirement for settling the underly asset, Tiger Brokers reserves right to exercise force liquidation of the position of your account to avoid margin call. Please deposit sufficient funds to your account to ensure margin requirement is always satisfied, or close your position if you expect insufficient margin would appear in your account after your exercise of option.
In order to mitigate the risk of insufficient margin, Tiger Brokers reserves the right to:
i. enable forced liquidation prior to expiration of your contract,
ii. render option contract null and void,
iii. facilitate the exercise of your option contract but liquidate other positions of your account.
- Stock options that expire on which days are available for trading?
Tiger Brokers currently only supports the stock options that expire on Friday, however, we aim to continuously enable and offer more selections for our customers to trade.
- Index options that expire on which days are available for trading?
We currently supports the trade of Index options that expire on Monday, Wednesday and Friday.
- What are the differences between Weekly Index options and Monthly Index options?
Generally, for weekly index options, the last trading day of the option is the day of contract expiration. The value of the contract is calculated and settled based on the price of the underlying index after the close of market (P.M. Settlement); for monthly options, the last trading of the option is the day prior to the expiration, the contract value will be settled according to the price of the underlying index after the market open on the expiration date (A.M. Settlement).
- How to distinguish between Weekly options and Monthly options?
Weekly options will be marked with an identifier - "W" after the expiration date on the Options chain, Monthly options are without such identifier.
- How many index options that Tiger Trade app supports to trade?
Tiger currently supports SPX, DJX, NDX, VIX, XSP, and NANOS. We aim to continuously enable and offer more selections for our customers to trade.
Option strategies margin requirements warnings
1. You will benefit from a lower margin requirement if the option strategy is being used in your account as the risk is mitigated.
2. However, if any part of the position of your option portfolio is closed by you, which means your option strategy remains invalid, your account is therefore no longer benefitted by the lower margin requirement. Please be aware if the margin call is triggered, other positions of your account may be liquidated by us. As such, please ensure sufficient funds are available in your account before you liquidate any position.
3. If you decide to liquidate position of your option portfolio, we suggest you liquidate the option contract first to avoid the increase of the margin requirement. However, if you liquidate the stock of the portfolio first, and your order only partially executed in the market, which means your option strategy remains invalid, this will lead to margin requirements are applied to both stock and option positions, which will aggregates the margin level of your account.
4. Please note the option strategy can not be used on stocks or options that code or contract multiplier are changed due to corporate actions. If the underlying asset of your portfolio happens to be the change as aforementioned, this may lead to your option portfolio invalid and increase of the margin level of your account as result, please always ensure sufficient funds are available in your account to avoid the forced liquidation.