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If an in-the-money put option is not exercised by 4 p.m. ET on the expiration date, can the shares be assigned to the seller of the put option, or does it expire worthless?

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Options that are in the money by more than one cent are automatically exercised, by most brokers. If you hold a contract without instructing the broker not to auto-exercise, and you let it expire, you run the risk of waking up Monday to a losing position. Best to check to see your own broker’s rules for auto-exercise.

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Apart from auto-exercise, you may have until as late as 5:30 pm ET on the expiration Friday to exercise.

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If an option is one cent or more ITM at expiration, the Option Clearing Corp (OCC) will automatically exercise your options whether they are long or short. This is called Exercise by Exception.

For equity options, you will end up with a position in the underlying. Index options are cash settled. A broker's threshold for automatic exercise may or may not be the same as OCC's.

If you are long the option, you can designate to the OCC via your broker that your options are not auto exercised at expiration. This would make sense if they are ITM by pennies and your commission to close the position exceeds the ITM amount.

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