how do you write off an investment with no bid?

[nodnub]

Yes, I've done it before on IB. I'd tell you exactly how except I can't for the life of me remember my IB password!

 

Here's what IB says:

 

What if I have a long option which I do not want exercised?

If a long option is not in-the-money by at least $0.01 at expiration it will not be automatically exercised by OCC. If it is in-the-money by at least that amount and you do not wish to have it exercised, you would need to provide IB with contrary instructions to let the option lapse. These instructions would need to be entered through the TWS Option Exercise window prior to the deadline as stated on the IB website.

 

http://ibkb.interactivebrokers.com/article/1718#What_if_I_have_a_long_option_which_I_do_not_want_exercised_

 

^^I'm almost positive that they cancel the contracts as soon as you enter the instruction (during market hours), but I canceled mine within 3 days of expiration so it could be different if you're a month away.

 

Thank you very much for relaying that anecdote.

 

I had just ended a chat a few minutes ago where I asked the IB representative if I could pay them a fee to buy my position from me.  He said "I believe what you are referring to is Cabinet Trades.  We do not offer that service at IB".

 

So I was bummed out.  You have given me a different question to ask of them now.  However I'm afraid it's a different situation.  I need it cancelled about 17 days before expiry -- the link you showed me merely talks about forcing them not to exercise under any circumstance.

 

Well, I have 2 more days to go to wait out the wash sale period.  The bid is still 2 cents.  Probably will be there still.

 

Eric,

 

That is strange,  IB makes reference to Cabinet Trades in the footnotes of this page.  https://www.interactivebrokers.com/en/index.php?f=commission&p=options1 

 

I wonder if this page is out of date, or if you were provided with incorrect information?

 

[ERICOPOLY]

Yes, I've done it before on IB. I'd tell you exactly how except I can't for the life of me remember my IB password!

 

Here's what IB says:

 

What if I have a long option which I do not want exercised?

If a long option is not in-the-money by at least $0.01 at expiration it will not be automatically exercised by OCC. If it is in-the-money by at least that amount and you do not wish to have it exercised, you would need to provide IB with contrary instructions to let the option lapse. These instructions would need to be entered through the TWS Option Exercise window prior to the deadline as stated on the IB website.

 

http://ibkb.interactivebrokers.com/article/1718#What_if_I_have_a_long_option_which_I_do_not_want_exercised_

 

^^I'm almost positive that they cancel the contracts as soon as you enter the instruction (during market hours), but I canceled mine within 3 days of expiration so it could be different if you're a month away.

 

Thank you very much for relaying that anecdote.

 

I had just ended a chat a few minutes ago where I asked the IB representative if I could pay them a fee to buy my position from me.  He said "I believe what you are referring to is Cabinet Trades.  We do not offer that service at IB".

 

So I was bummed out.  You have given me a different question to ask of them now.  However I'm afraid it's a different situation.  I need it cancelled about 17 days before expiry -- the link you showed me merely talks about forcing them not to exercise under any circumstance.

 

Well, I have 2 more days to go to wait out the wash sale period.  The bid is still 2 cents.  Probably will be there still.

 

Eric,

 

That is strange,  IB makes reference to Cabinet Trades in the footnotes of this page.  https://www.interactivebrokers.com/en/index.php?f=commission&p=options1 

 

I wonder if this page is out of date, or if you were provided with incorrect information?

 

'indirect' had a good suggestion and provided me with a contact number to pursue with the IBPrime services.

 

Thanks for finding this reference to Cabinet Trades -- that would of course be the simplest avenue, and it is a bit shocking that something so useful isn't clearly offered (if at all).  I've now chatted with two of their representatives who claim there is nothing they can do for me -- one of them explicitly stating that IB does not offer Cabinet Trades.  Maybe I should push them harder showing them the page you showed me.

[ERICOPOLY]

Contact the equity derivatives desk at a few IBs.  Tell them you'll sell them the position for a penny.  You might get a bite on that. 

 

That's probably a good suggestion as well except I don't know how to contact the equity derivatives desk at investment banks.  I think this might be the same path that 'Indirect' has more recently put me on to, but I'm not sure.  I don't know a lot of the ropes that you guys do.

 

[Kraven]

Contact the equity derivatives desk at a few IBs.  Tell them you'll sell them the position for a penny.  You might get a bite on that. 

 

That's probably a good suggestion as well except I don't know how to contact the equity derivatives desk at investment banks.  I think this might be the same path that 'Indirect' has more recently put me on to, but I'm not sure.  I don't know a lot of the ropes that you guys do.

 

I am sure if you asked there are any number of people on the board who could put you in touch with someone or at least give you some names and numbers.

[Guest wellmont]

I did not read the whole thread, but I had a similar situation at the end of last year. I had a few HP 2013 calls that were being quoted around 2c, I put a limit order for 1c and then tried a market order but it did not execute. Since the amount I invested is very small I did not give it much thought.

 

I wrote a post on this and there was a suggestion that I could get a friend to put in a bid, but others have commented that it might be matched up to someone else's ask.

 

Vinod

 

it seems like you would have a very good case that the security is worthless for tax purposes in the year it could not be sold with a market order. simply keep your records and record your intentions in a notebook. But I am sure this has come up before in tax case law. A good tax attorney is your friend. Such are the burdens of wealth. :)

[LC]

I agree with wellmont... if it was a corporation, would they not write down the value of the options to zero and claim a loss? Then if it was sold in the following year for a nominal amount, that amount would be some type of recovered gain. Would the same thing work for an individual?

[Kraven]

I agree with wellmont... if it was a corporation, would they not write down the value of the options to zero and claim a loss? Then if it was sold in the following year for a nominal amount, that amount would be some type of recovered gain. Would the same thing work for an individual?

 

I'm not a tax guy. I believe though it's the difference between cash and accrual basis. For a cash based payer I would think that it truly needs to be worthless to be realized as such. So something like a bankruptcy might mean that it's worthless prior to maturity. Agreed on asking a tax attorney. I would think this is a straightforward question. Might be worth a few bucks to get an answer. A good accountant could probably take care of it too.

[JAllen]

I haven't read through all of these Eric (I have searched for what IB calls it though).  IB most certainly will buy, at least stock shares from you, for a dollar.  It's called 'dollar for lot' and I just did it last week. You just submit a form to them (after you request it of course) and they buy them from you for a dollar.  Hopefully they do it with your options too...

[ERICOPOLY]

I haven't read through all of these Eric (I have searched for what IB calls it though).  IB most certainly will buy, at least stock shares from you, for a dollar.  It's called 'dollar for lot' and I just did it last week. You just submit a form to them (after you request it of course) and they buy them from you for a dollar.  Hopefully they do it with your options too...

 

You rock!

 

Searched on "dollar for lot" and found their form -- and yes, "Option" is one of the types of securities on that form:

 

www.interactivebrokers.com/download/DollarForLotForm.pdf

 

[pocoapoco]

Looks like the Jan 12 puts are 2 cent bid with many trading Friday (and a last of .03), so certainly you should hit that bid before even considering selling the options to IB.  The 11 strike is 1 cent bid so you have some time.

Eric I should add that if they do go no bid and no one lifts your penny offer (which I believe was the original point of your post) then selling to IB using "DollarForLot" seems like the way to go.  It's so similar to a cabinet bid that I'm surprised they weren't more helpful when you contacted them.  I used to trade options and people sold at a cabinet all the time for the same reasons.

[ERICOPOLY]

fyi:

 

IB doesn't offer "Dollar for lot" if the options have an expiration date.  So that program can't be used to close out the typical puts and calls that we are accustomed to dealing with. 

 

Here is the relevant snippet from my chat session with them today:

 

 

Stan M: Sorry this won't work. IB does not extend the Special Position Liquidation program to options that have a definitive expiration date.

Stan M: Additionally, IB does not offer cabinet trades.