0

I have a sell put Strike @ $100. At expiry yesterday, share price is @ $100.32. Will I be exercise?

Improve this question

1 Answer 1

Reset to default
1

The probability of you being assigned is very low. The strike Kp doesn't exceed the MVPS, so automatic exercise isn't happening.

However, if the option was ITM by a certain threshold (normally $0.01), the OCC will by default offer the buyer the ability to ask for sellers of the contract series to be assigned. This is known as "exercise by exception"; in the absence of contrary instruction from a clearing member, the OCC will assign a seller, and the transaction will proceed.

On the other hand, it's still possible (theoretically) for a market participant holding / long on that same option series that you sold to exercise before 4:30pm CT the Friday that it expires even if the option is OTM. They have the right but not the obligation to exercise the option, regardless of the market price of the underlying relative to the strike.

So there's no guarantee that you won't be assigned, but the practice of exercising an OTM option is rare.

Improve this answer
1
  • Hypothetical question. It's expiration and (A) is long the entire call open interest in stock ABC at strike $100 and (B) is short that entire position. No other players exist at that strike. This $100 call ends slightly ITM. (A) informs the OCC via his broker not to auto exercise. Does that mean that (B) gets a free pass even though his short calls expired ITM? I'd assume so ... but?
    – Bob Baerker
    Commented Jun 19, 2021 at 17:38

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .