The tastyworks risk team monitors potential expiration risk throughout the day and periodically sends notifications to accounts that have excessive potential expiration risk. As the end of the day approaches, the risk team may need to start closing positions that pose excessive risk. To learn more about expiration risk, please click here.
While the number of accounts with potential risk and market volatility can affect how early our risk team needs to act, we try to hold off as long as we can to give our client’s as much time as possible to manage their positions.
If you email firstname.lastname@example.org on expiration day (prior to 12:00 PM CT)and assure us that you will close any positions that may pose an excessive risk, we will try to hold off even longer (typically until the last 5-10 minutes of trading). Please keep in mind the following:
- We can not maintain "standing requests"; we need to be notified each expiration on expiration day.
- If you indicate that you are monitoring your positions, our risk team may still close positions on your behalf if deemed necessary.
- If you indicate that you are monitoring your positions and you do not close all positions that may pose potential expiration risk, we may not be able to accept these requests going forward.
- Short options can still be assigned if they close out of the money. This means that short options that close out of the money may still pose potential expiration risk. The only way to certainly eliminate expiration risk associated with short options is to close them.
If you do not close a position that poses an excessive risk, we may trade stock against it as a hedge. The resulting stock position will be your responsibility.