Let's assume the following scenario:
- American style long call option contract heavily in the money (CBOE)
- Couple of days to expiration
- Very high risk that underlying asset will fall sharply when regular trading session opens
- 1AM EST
Now, we cannot sell the option contract premarket, but could we exercise the option contract, get shares and sell them as soon as premarket trading sesion opens?
Three more points:
- Lost intrinsic value is clear to me in this potential transaction
- There is enough funds for the exercise
- Broker is Interactive Brokers
I found two bits of information about OCC rules:
- "From 9:15 EST" - so we can exercise "only" 15 minutes before regular trading session?
- "Exercise at ANY time"
They are sort of mutually exclusive.
So, to summarize this: Is it possible to take advantage of the exercise operation in order to get a chance to sell an asset in the premarket session (specific scenario being CBOE options, NASDAQ underlying shares & IB as broker)?