You're using the right option. I've seen this happen, the signature block detection is not perfect, perhaps the email format (HTML vs plain text) matters or perhaps the signatures are not "-- "? (the space is important).

You are correct, the sig stripping does seem to work only on plain text messages. However, since nearly all messages are formatted these days - including both Yahoo Mail and Gmail - it makes this feature pretty useless doesn't it?

You make a point, I wish this was 100% accurate and worked with all HTML emails :)