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 funds to exercise the right, the contract will be liquidated at a market price two hours before the regular trading hours closed. 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.
iv. No market liquidity.
- 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 does TFNZ have available to trade?
TFNZ currently supports SPX, DJX, NDX, VIX, XSP, and NANOS trading. We endeavour to make available more index options for our clients to choose from.
- Is early exercise supported?
Currently, TFNZ only supports early exercise of US stock options. You can find it in 'Portfolio - More - Option Exercise'.
- Why is early exercise revoked?
In the following scenarios, your Early Exercise will be revoked.
i.When your account has insufficient funds
ii.When there is a corporate action adjustment on the underlying stock of the option.
iii.When there is a corporate action adjustment of the option.
Please make sure that you are fully aware of the above scenarios for revocation before requesting early exercise, and pay attention to the status of the early exercise request in a timely manner. The investor will be responsible for the profit and loss caused by the revocation.
-Is the do-not-exercise option supported?
Currently, Tiger only supports the do-not-exercise for US stock options. You can submit an application through 'Portfolio - More - Option Exercise' before the day of expiration at the close of the market.
Please note that in-the-money options which are not in the do-not-exercise process will be automatically exercised on the expiration date. If your account does not have sufficient funds to exercise options at "zero days to expiration", it may lead to forced liquidation. Please ensure the fund sufficiency of your account.
-Why is do-not-exercise revoked?
In the following scenarios, your do-not-exercise will be revoked.
i.When there is a corporate action adjustment on the underlying stock of the option.
ii.When there is a corporate action adjustment of the option.
Please make sure that you are fully aware of the above scenarios for revocation before requesting do-not-exercise, and pay attention to the status of the do-not-exercise request in a timely manner. The investor will be responsible for consequences caused by the revocation.
-Changes in margin requirement for the do-not-exercise option
After you submit an application, if the long call or put option becomes in-the-money during the expiration period, the system will not increase the position margin, and it will not automatically exercise upon expiration.
If you revoke the application, and the long call or put option becomes in-the-money during the expiration period, the system may increase the position margin.
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 becomes invalid, your account will therefore no longer benefit from the lower margin requirement. Please be aware if a 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 the position of your option portfolio, we suggest you liquidate the option contract first to avoid an increase in margin requirement. However, if you liquidate the stock of the portfolio first, and your order is only partially executed in the market, your option strategy could become invalid and this will lead to margin requirements applied to both stock and option positions, which will increase the margin level of your account.
4. Please note option strategies cannot be used on stocks or options whose code or contract multiplier is changed due to corporate actions. If those changes happened to your options contract(s), this may cause your option portfolio to become invalid and increase the margin level of your account as a result, please always ensure sufficient funds are available in your account to avoid a forced liquidation.