OptionsXpress Fraud and Embezzlement
Online Options, Stocks & Futures Brokers
311 W. Monroe Street, Suite 1000
Chicago, Il 60606
I make use of a put credit spread strategy on the SPX or the S&P 500 index, and when the SPX drops down to the strike price of the short put I exit the spread.
On 1/22/08 I had a spread of 26 SPX Feb 1300 Short Puts x 26 SPX Feb 1275 Long Puts. I had a trigger point set to 1299 so that if the SPX or the S&P 500 drops below 1299 then immediately my spread should be sent to the floor as a Market Order to close.
However, when I examined the fill report, I found out to my amazement that OptionsXpress triggered my spread closing order not at 1299 as I specified when I setup the contingency order, but at 1275.62 or while the SPX lost another 1.8% of its value. The closing cost was $1,400 per spread put or $36,400 for 26 spread puts, and based on my experience (six years as an active trader of options, and almost exclusively trading options on the SPX) if it was done right I should not have paid more than 10.00 or $26,000 for 26 spread puts even under conditions of high volatility because the long leg counterbalances the short leg which is one of the advantages of trading credit spreads versus naked options.
I notified the OptionsXpress executives of this error, and told them that it is their responsibility to absorb the cost of this $10,400 contingent order late activation error or irregularity, and I was even assured by one of OptionsXpress' Executive Vice President, Phil Bennett, who happens to be the brother of OptionsXpress Current Vice Chairman and Prior CEO, Ned Bennett, 6 years ago when I considered the possibility of a contingent order not activating that OptionsXpress has business insurance for such an event, and I will be made whole in such a case.
To my utter disbelief and bewilderment I found them to turn options theory on its head, and make the outrageous false contention that I would have received the same fill price whether my closing spread Market Order was executed 1 point ITM or almost 25 points ITM on the SPX.
Bernard Laufer MCP, CPA
P.S. Those six letters after my name indicate that I am an Investigative System CPA by profession. It was my job to detect fraud, and catch *** artists as they were engaging in their criminal acts, but I was taken by the OptionsXpress Management Team of *** Artists before I even knew what hit me.
In any case, I suggest that if you have any dealings with this firm then head for the nearest exit metaphorically speaking. An ounce of prevention is better than a pound of cure. Financial *** artists are generally good at what they do, and some are so good at what they do that they up ripping off the public of millions and even of billions of dollars legally as we are well aware of.
As I write this complaint here I already filed a report with the Securities Exchange Committee, and requested that they start a criminal investigation into OptionsXpress' Executive Management fraud and embezzlement of my assets plus I have several other logs in the fire to teach the executive swindlers at OptionsXpress that crime really doesn't pay. I wonder how much this public dispute will end up costing them in lost business!
Review about: Options Trading.
Review #132526 is a subjective opinion of a user.