Other FAQs for trading US options
1) 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 contract on SPY with an expiration date of April 8, 2022 and a strike price of $195 trading at a market price of USD 2.1 has a value of USD 210 (USD 2.1*100).
2) What are the brokerage fees for an option contract?
Please refer to https://www.tigerbrokers.nz/commissions/brokerage/options for brokerage and other fees.
3) 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.
4) When can options be exercised?
Exercise on Expiration Date: Options contracts will generally be exercised or cancelled after the close of the market on expiration date. If an expiration date falls on a holiday, the exercise or expiration time of the options contracts may change. Please refer to your order details for more information.
Early Exercise: This type of right to exercise applies to American options only. A seller of an options contract will be required to settle the underlying assets of their contract when their contract is assigned.
5) Can option contracts be closed at any time before the expiration date?
An option, no matter long or short position, may be closed during any one of its trading sessions before the expiration date at the prevailing market price when available.
6) On the expiration date of a stock option contract, how will an in-the-money contract be settled if no action is taken?
Automatic exercise is the default settlement at the expiration for a stock option contract that expires US$0.01 or more in-the-money (“ITM”).
However, if an account does not have sufficient funds for an ITM or near-the-money option contract to be exercised/assigned two hours before its expiry, Tiger may force close that contract at market price to avoid force liquidation on the account’s other positions.
If a long ITM option contract is not closed before it expires, due to reasons such as an illiquid market or any other issues, Tiger may submit a “Do Not Exercise” instruction to override the default automatic exercise mechanism to render that contract that could trigger a force liquidation void. Please refer to Questions 18 – 20 for “Do Not Exercise”.
7) What will happen if I purchase an option contract (put or call) but it expires at less than $0.01 in-the-money and no other action is taken?
Under such a scenario, the option contract will normally be rendered null and void. The loss will be the premium paid.
8) 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.
9) Why is my order not executed?
It may be due to one or a combination of the following reasons, including but not limited to:
i. Quotations from different exchanges are not synchronised;
ii. Minimum price ticks of exchanges are different;
iii. A quote is part of a multileg order;
iv. No market liquidity.
10) What would happen if my account is unable to meet the margin requirement?
Your account will be monitored prior to the end of each trading day’s regular trading hours to ensure your account has sufficient funds available for the purpose of settling the underlying assets if a contract is exercised or assigned. Tiger may force close a contract and/or other positions of an account when the account does not have sufficient funds for (i) an in-the-money or near-the-money short contract to be assigned before the end of each trading day’s regular trading hours or (ii) an in-the-money or near-the-money long contract to be automatically exercised before its expiry – please refer to Question 6. Please ensure sufficient funds are deposited into your account or close your position when you expect insufficient margin to happen in your account, e.g., after you exercise your option.
In order to mitigate the risk of insufficient margin, Tiger reserves the right to:
i. enable forced liquidation prior to the expiration of your contract,
ii. render an option contract null and void,
iii. facilitate the exercise of your option contract by force liquidating other positions of your account.
11) Index options that expire on which days are available for trading?
We currently support the trade of Index options that expire on Mondays, Wednesdays and Fridays.
12) 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).
13) 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.
14) How many index options does Tiger have available to trade?
Tiger currently supports SPX, DJX, NDX, VIX, XSP, and NANOS trading. We endeavour to make available more index options for our clients to choose from.
15) Is early exercise supported?
Currently, Tiger only supports early exercise of US stock options. You can find it in 'Portfolio - More - Option Exercise'.
Notes: Activating 'Allow OTM options execution' indicates your instruction to exercise this option regardless of its moneyness on the Early-Exercise Date. Otherwise, the request for early exercise could be revoked when the options contract is out-of-the-money.
16) Why was my early exercise application 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 options,
iii. When there is a corporate action adjustment in the options,
iv. When you are not activated 'Allow OTM options execution' and the contract is out-of-the-money.
Please make sure that you are fully aware of the above scenarios for revocation before requesting early exercise, and pay close attention to the status of your early exercise request. Consequences for a revocation are the investor's to bear.
17) Is the do-not-exercise choice supported?
Currently, Tiger only accepts do-not-exercise applications for US stock options. You can submit an application through 'Portfolio - More - Option Exercise' before a contract expires at the close of the market.
Please note that your in-the-money contract without a do-not-exercise instruction will be automatically exercised when it expires. If your account does not have funds sufficient to exercise "zero days to expiration" option contracts, your account may be force liquidated. Please ensure the sufficiency of funds in your account.
18) Why was my do-not-exercise application revoked?
In the following scenarios, your do-not-exercise will be revoked:
i. When a corporate action causes an adjustment to the underlying assets of your option, or
ii. when a corporate action causes an adjustment to the option contract.
Please make sure that you are fully aware of the above scenarios for revocation before you submit a do-not-exercise application, and pay attention to the status of your application in a timely manner. The investor will be responsible for all consequences caused by the revocation.
19) Changes in margin requirement relevant to do-not-exercise (“DNE”) requests
After your DNE application is accepted, if the contract becomes in-the-money before or when it expires, our system will not increase that position’s margin requirement, and it will not be automatically exercised upon expiration.
After you revoke a DNE request, our system may increase that position’s margin requirement as soon as that contract becomes in-the-money or near-the-money.
20) Option strategies margin requirements warnings
1. You may benefit from a lower margin requirement if a recognised option strategy is being used in your account to mitigate risk.
2. However, if any part of the position of a recognised option strategy is closed by you, which causes your option strategy to become invalid, your account will no longer benefit from the lowered 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 positions of your option strategy, we suggest you liquidate the option contract first to avoid an increase in margin requirement. If you liquidate the underlying assets of the strategy first, and your close order for your option contract is only partially executed in the market, your option strategy could become invalid and margin requirements could be required separately for the 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 happen 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 ensure sufficient funds are always available in your account to avoid forced liquidation.
Please refer to https://www.tigerbrokers.nz/help/detail/37252410 for Hong Kong options' details.