When do long options automatically exercise? (US options and futures)
The Options Clearing Corporation (OCC) will automatically exercise any expiring equity/ETF option(s) that close in the money (ITM) by at least $0.01. For example, if you purchased an XYZ $50 strike call and the stock closes at $50.01 or higher at expiration, the call will automatically exercise, and the account will be long +100 shares purchased at a price of $50 per share. On the other hand, if you purchased an XYZ $50 put and the stock closes at $49.99 or lower at expiration, the put will automatically exercise, and the account will be short -100 shares sold at $50 per share. You can determine if an Equity and ETF options are ITM or OTM based on the last price (close price) at expiration.
Do Not Exercise Requests (DNE)
If you have a long option that expires ITM and do not want it to exercise automatically, please contact us with a Do Not Exercise (DNE) request by 3:30 PM CT (Chicago time)
When does a long option not automatically exercise?
The OCC will not automatically exercise expiring options that close OTM or ATM. You may choose to exercise your long option but you must contact us before 3.30 CT (Chicago time) to do so.
To take on automatic exercise of a long option, your account must have the funds necessary to cover the requirements for the shares, if not, then your expiring options may be closed by our risk management team.
Disclaimer about after-hours price action
The after-hours price action does not determine whether an option is no longer in or out-of-the-money on the expiry day. If you are long an option that expires OTM based on the last price, but due to after-hours price action it goes ITM, then you can still submit an exercise request. To do so, contact us before 3.30 CT (Chicago time) and ensure that your account has enough buying power for the request. On the other hand, if your option expires ITM, but due to after-hours price action it goes OTM, then your long option will still auto-exercise. If this occurs, then you may request a Do Not Exercise (DNE) request by contacting us before the cutoff time.
