In-the-Money Options Automatically Exercise

The Options Clearing Corporation (OCC) will automatically exercise any expiring options that close in-the-money by at least $0.01. 


That means if you purchased an XYZ $50 strike call and the stock closes at $50.01 or higher at expiration then the call will automatically exercise and the account will be long 100 shares @ $50. 


On the other hand, if you purchased a XYZ $50 put and it expires at $49.99 or lower at expiration then the put will automatically exercise and the account will be short 100 shares at $50.


Equity and ETF options are considered in or out-of-the money based on the last price (close price) at expiration.


Out-of-the-money and at-the-money options not automatically exercise 

The OCC will not automatically exercise expiring options that close out-the-money or at-the-money. These options may still be exercised, but you need to provide tastyworks with an exercise request by 3:15 PM (Central, Chicago time) to exercise these options.


"Do Not Exercise" Requests (DNE)
If you do not want to exercise a long option contract that would automatically be exercised, you need to provide tastyworks with such a request by 3:15 PM CT. DNE's can be made via email to our trade desk (tradedesk@tastyworks.com) or by phone at 312-724-7075.


A note about after-hours price action

Price action during the after-hours session (after the close) does not determine whether an option is no longer in or out-of-the-money. 


If you own (long) an option that expires out-of-the-money based on the last price, but due to after hours price action it appears to go in-the-money, then you may request your long option to be exercised as long as you make your request by 3:15 PM (Central, Chicago time). Your account will need enough buying power to request an exercise.


On the other hand, if your option expires in-the-money but due to after-hours price action is appears to go out-of-the-money, then your account will still auto-exercise your long option. If this occurs, then you may place a "Do Not Exercise" (DNE) request.