RSX & OZON Updates & MOEX Status

internetkings · March 17, 2022, 2:04pm

I thought I would eMail Robin Hood based on the new “theocc” memo - there reply is below -

Hi ----------,

Thanks for reaching out to the Advanced Brokerage Team. My name is Robert and I am more than willing to assist you today.

I understand it can be very concerning with options contracts that deal with the unprecedented events taking place in Russia, but I can help clarify what is going to happen with the RSX 2022-03-18 Put $5.50 contracts.

It is first important to note that all shares of RSX are currently untradeable as they are halted. This would also mean that the since the underlying of RSX is halted, the options contracts on RSX have also become halted or untradeable.

Since we have 5 RSX 2022-03-18 Put $5.50 puts, in order to exercise the position, we would need 500 shares of RSX which we currently do not have and since the shares are halted, cannot be purchased. This would mean that we are unable to participate in broker to broker settlement of exercise and assignment because we are unable to obtain the deliverable of 500 shares and if we did, you would be selling short 500 shares of RSX.

As alluded to previously, these contracts have also been halted from being traded meaning you are unable to buy or sell these contract currently due to the underlying halt on RSX. If RSX remains halted by the expiration date of these contracts, these contracts will expire worthless.

I know this can be extremely frustrating, but we have no control over the halts nor adjustments to the contracts purchased on RSX, nor did we have any idea these events would take place.

I hope this clears things up and if you do have any further questions, feel free to reach back out.

Have a great rest of your week.

Sincerely,

Robert

Case ID: 23056810

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TheOtherePete · March 17, 2022, 2:06pm

Just a reminder, if you want to see the impact of going short 100 shares RSX in IBKR, type in the trade, right-click and do “check margin impact” Also the borrow fee (which can change day to day) can be seen at any time:

Conqueror · March 17, 2022, 2:06pm

Just got off the phone with OCC. I was told by them that these memos effectively mean that you can exercise your contracts and if the broker is unable to deliver the shares, it would result in cash settlement.

I asked for clarification and was told that this means that your broker, in the event that they cannot provide shares for your long puts, should be able to apply to have settlement done in cash.

I’m going to call TD and get their perspective on this, so don’t get filled with hopium yet, but this looks to be a good thing at the moment.

nano · March 17, 2022, 2:10pm

Does this apply to ITM puts only? Or OTM as well?

RefirgerateMyESSCash · March 17, 2022, 2:11pm

There doesn’t seem to be anything in that RH email to suggest that they read, processed and understood the new OCC memo.

Conqueror · March 17, 2022, 2:11pm

The cancellation of automatic exercise is still in effect, therefore you should be able to choose what options you’re exercising.

internetkings · March 17, 2022, 2:12pm

I replied to Robin Hood summarizing the memo, and that prospective to see what type of reply I get once I receive it.

(edit) my reply to them -

Hi Robert

While I am no expert the memo from theocc’s states below –

“Pursuant to OCC By-Law Article VI, Section 19, OCC has determined that, effective with exercises of March 16, 2022 and thereafter, all RSX exercise and assignment activity shall settle on a broker-to-broker basis. The deliverable for RSX options contracts will remain 100 RSX Shares. If it is not possible for the delivering Clearing Member to effect delivery of the RSX shares on the designated settlement date, then the settlement obligations of both delivering and receiving Members shall be delayed until such time as OCC designates a new exercise settlement date, settlement method and/or settlement value. This determination allows delivering Members the opportunity to effect settlement if they have RSX shares and are able to effect delivery, but delays the settlement obligation when this is not possible. Both the delivering and receiving Clearing Members are required to immediately notify OCC if they are unable to effect settlement. In determining that delivery of the RSX shares is in fact not possible in respect of a given exercise or assignment, OCC shall require an appropriate officer(s) of the delivering Clearing Member to represent in writing that delivery is not possible. (Upon exercise or assignment of RSX options, OCC will contact each delivering Clearing Member to provide the specific requirements and procedures for such representation.) Pursuant to customary OCC broker to broker settlement procedures, inability to effect delivery may subsequently occasion cash settlement as determined by OCC.

Members are responsible for contacting the opposite side on all RSX activity and for making arrangements for settlement. Both delivering and receiving Members are also reminded of their obligation to inform OCC when settlement is made. OCC will continue to margin RSX exercise/assignment activity until settlement is accomplished.”

This does seem to imply they should not expire worthless. While I agree the events are unprecedented in the Russia I was previously informed by Robin Hood customer support that these situations are quite common with other Asian related stocks and ETF’s. While I understand you have no control over the events, the statements you made seem to run contrary the OCC memo. See “inability to effect delivery may subsequently occasion cash settlement as determined by OCC.”

TheMadBeaker · March 17, 2022, 2:17pm

What price do they consider for cash settlement? The last traded price or something else?

Leo27 · March 17, 2022, 2:17pm

does Robinhood always show you the intrinsic value comment when you try to exercise options?

apologies for the noob question

bajillion · March 17, 2022, 2:24pm

Seems to me like cash settlement would be based on the last traded price, which puts the $5.5 contracts OTM. So cash settlement means you would just lose money, right? If they actually valued these where they should be valued, then you might be able to come out ahead. Same with OZON. The last traded price puts the $10 OTM so I don’t see the value in cash settlement. Halting these from trading has screwed this all up.

thots_and_prayers · March 17, 2022, 2:25pm

To email Fidelity:
https://digital.fidelity.com/ftgw/digital/secureemail

internetkings · March 17, 2022, 2:26pm

depends on the underlying this an example of an OTM Call and a OTM P

BBarna · March 17, 2022, 2:27pm

OZON last traded price was $9.40 if i remember correctly (assuming PM trading counts) so thats a little better, but otherwise for now on the same page as you

bajillion · March 17, 2022, 2:28pm

Webull shows it at 11.60 for me.

macromicrodick · March 17, 2022, 2:41pm

anyone with IBKR get this bug popping up showing RSX has resumed trading?

whoops doxxed my account

BBarna · March 17, 2022, 2:43pm

yeah, i’ve been getting it almost every day

Minimal_Effort · March 17, 2022, 2:45pm

Looks like it shows $9.41

LetsSayGG · March 17, 2022, 2:46pm

can you buy and sell?

macromicrodick · March 17, 2022, 2:46pm

have we tried selling? i’m planning on exercising 1 put but should i try selling 1 now? doesn’t seem to say there’s any restriction on selling when i prepare the order?

fuzed · March 17, 2022, 2:48pm

schwab went from no shares available this morning and he said a recent memo came out saying i need to have money for a 500% upswing now. so hes saying on my 20 7p’s i need to have $70,000