Introduction to options sources invariably say an option's extrinsic value becomes zero at expiration. However, in reality this is not the case. For example, it is almost 7pm on 8/21 and "8/21 292 SPY" calls look like this according to my broker, Fidelity.

underlying price: $292.45 last: 0.90 bid: 0.86 ask: 0.94

I suspect the bid and ask are historical since the market is closed. The last trade was at 4:14pm, or one minute before close, so the numbers represent the true closing price at expiration.

There's roughly 292 - 292.45 + 0.86 = 0.41 of extrinsic value left from the short position's perspective even after the market closes on the day of expiration. Why should that be? Once the market closes I would think all extrinsic value should be wiped out. It seems an option writer has no choice but to suffer assignment to realize the full premium value. It also stands to reason that option buyers really, really don't want to take delivery since they will pay that large extrinsic value but gain no additional "option" from it.

2 Answers 2


The reported SPY close of $292.45 occurred around 4:00, not 4:15. From what I see, SPY rose in after-hours trading and reached $292.84 at 4:15. This is nearly in line with the price of the option, which can trade until 4:15.


Fidelity is providing stale quotes.

The SPY's 4:00 PM close was $292.45 but the last trade in the SPY 8/21 292 call was as you posted:

$0.86 bid x $0.94 ask

This option quote occurred at 4:14:59 PM at which time the SPY was at $292.86 x $292.89

The market maker has no incentive to offer the exact intrinsic value so the option quote will always be a few cents away from intrinsic value. That's the haircut that you pay in order to close an existing position at expiration.

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