Do you pay a fee when your option expires?

lets say I buy a long call AMZN option with expiration date in 30 days
if the underlying stock goes up and I decide to take profits earlier I can excersize my option after 15 days and pay the excersize fee to my broker (10$)

but what happens if i decide not to? what if i hold my option till the expiration date - what happens at that moment? broker takes that excersize fee from my account anyway and excersize my option? what exactly happens? (i am nooby)

 

Regarding first part of question: underlying goes up (call strike below current price)... Sell the option instead of "exercise" should always (unless some flaky business going on) be more profitable, as you receive both extrinsic and intrinsic value. If you exercise, you forfeit the extrinsic value and pay additional brokerage fees for exercise.

Regarding 2nd part: Check with your broker. For: TDA, they should exercise if 1 penny or more ITM, so you will pay cost to acquire at your contracted price + exercise/commissions. (speaking from memory, so verify yourself)

Typically, folks that trade options, ... trade options. No need to actually trade the underlying. However, you can have assignment risks, so change your trading plan accordingly.

 

To take profits early on an American-style option just close it. Don't exercise.

 

Wow I thought excercizing means selling the options itself?
I am even more confused now Can you please tell what excersizing means then? And how to sell the option itself? (and is there a fee for that?)

 

Thanks for your reply but as it turns out i don't know what means to close the option (and what means to excersize the option)

 

If you bought the option to open @ $0.10 and it's now $1.10 you can sell it (to close) and take $1 profit.
If you exercise a long call you take delivery of 100 shares of the underlying stock at the strike price.

 

Say, initially you BUY a specific option. (This was a Buy to open a position)
Then you merely SELL that option! (This becomes a Sell to close a position).
I would never exercise, but your broker has a specific order for "exercise", which you likely should never use. The fee for "selling the option" should be identical to the fee for "buying the option"!

 

and when you sell an option do you pay the same exactl commision as when you buy it? so you have to pay commision 2 times to get in and out of that option?

 

Yup. Unless it expires worthless which doesn't cost commission.

 

Okay so as I understand it - our winners will trigger commissions 2 times (when we buy and then when we sell) but our losers will only cost us 1 commission fee as we never sell them and they just expire and disappear, coorect? ( sorry for bothering you but i want to understand it completely)

and one more question - what if our "winner" is in SUCH A SMALL profit that selling it will not even cover the commission? (let's say we will be in 10$ "profit" when we sell it but the commission will be 15$ for selling) will the broker still sell it at expire?