If I am short both a call and a put with the same strike on the same security, what happens if I let this position expire in-the-money?

How much, if any, cash would I need to have liquid at expiration to settle?

  • 7
    A put and call with same strike can't both expire in the money. Want to edit your question for clarity? Dec 8, 2014 at 19:42
  • Settlement should only be the amount ITM. Short Straddle are frequently used with "Delta Neutral" adjustments, so low commission rates are very important. Dec 13, 2014 at 0:54
  • You need to have enough cash as specified by your broker's maintenance margin. At expiry, if one of the options expire in the money, you will either end up with a long or short position. Now , if you don't have enough cash/ margin to cover the trade, the broker will liquidate your long/ short position
    – Victor123
    Feb 28, 2015 at 16:17

1 Answer 1


If you do not wish to exercise the option you can give your broker a 'contrary exercise advice' which is an instruction for them not to exercise the option at expiration (normally in the US, the OCC will automatically exercise any option that expires in-the money by a penny or more)

Otherwise you have to have sufficient margin available to complete the exercise of the in-the-money leg. If you have insufficient margin, your broker may elect to give contrary exercise advice on your behalf rather than allowing you to exercise and them being forced to liquidate.

You will likely need whatever margin would be necessary to purchase the underlying stock at the specified exercise price.

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