I bitched years ago about the 50 cent cutoff for auto execution of options in the money at expire. Imo it was a scam It's now going from 5 cents to 1 cent I'm always early.
You know why they call them "options", right? Because it's your option to exercise them or not. You can always instruct your broker to exercise an option, whether it's 5 cents ITM, 1 cent ITM or $20 OTM. Auto-exercise is only there to protect you from yourself. You are responsible for your own positions. There's no scam and there never was.
Stock, if what you meant was that this is a way to generate more commissions, then I agree. How does a 1 penny auto exercise protect you from yourself? The gain will not even cover the transaction cost, let alone compensate you for the risk of holding the underlying on Monday morning.
The people who made the rule don't get commissions, and my broker doesn't charge commissions for exercise or assignment. Auto-exercise in general protects you from yourself. Money is money, even if it is just a penny. It eliminates an equivalent amount of pin risk on the short side. Also, you are still in control of (and responsible for) your option exercises. You can always instruct your broker not to exercise if you don't want to pay the commission or hold over the weekend. Or you can sell your option. It is in the money, after all.
Your post is stupid. Don't like auto-exercise? Manually and explicitly exercise or lapse your options at 4:01 PM on Expiration Day. You have until 4:30 to give explicit instructions. If you forget about expiration day? Then you're fucking stupid and it's your own problem. And btw, I'd exercise an option 1 cent in the money. It costs me .5 cents / share to take an off-setting position, and then exercise the option, for a net profit of .5 cents / share. If your commissions are higher, and it's not worth it, then instruct your broker to lapse the damn option. What difference does it make if it's 1 cent or 5 cents, the choice is still yours.
I haven't done it myself, but I did mean it (though I don't advise it). You can exercise them even if they're DOTM. You don't have to depend on auto-exercise, and you should be in control of your own investments. On the other hand, you shouldn't take any advice about anything from a person who chooses the name "riskfreetrading", unless his strategy is holding government paper to maturity.
no, YOU are stupid. Why. You assume I'm disliking auto exercise when the exact opposite is true. Where does it say I am against this? I said 50 cents was a scam. It caused options with value to expire and benefit the seller. Get reading glasses you idiot.
He does not like me because he exercises OTM options, and he knows that I sell tops and pick bottoms (of his girlfriend). Links are here: