A friend asked this of me, but did not know ........ It's the third friday of the month, your strike price is $60, the stock closes at $59.30. So you are out of the money, but during after hours the price jumps to $63. Can you exercise your option?
Generally, yes, but it depends on your broker's cutoff time (i.e. the time by which you must notify your broker whether you want to exercise or not).
Great question (so much so that is one of the few times I post and not just lurk around). I would think your stock expires worthless by 4pm or earlier as there must be a cutoff time for you to notify your broker of exercise. Would love to hear from someone who has had actual experience with this type of situation as I'm certain it must've happened before.
You have until 5:30pm eastern time to either file a contrary exercise form (if you dont want an option exercised) or to exercise one that is out of the money based on the closing price. Each broker has different rules on when they need the information in order to meet this deadline. This can give you a lot of opportunity (especially with weekly options) If a stock closes near the strike on Friday, you may be able to purchase an option for a penny or two and have an extra hour and a half to play around in the after hours market.
adam warner (author of dailyoptionsreport blog which he doesn't update anymore) gave a great example of a company being bought out and the news breaking after 4 pm on expiry fri. long story short some people made a fortune and others lose one b/c they (the longs) were able to exercise until around 5:30. as another poster said, check w/ your broker to see how long you have to exercise. make sure you have these procedures written down BEFORE expiry so in the heat of battle you don't have to scramble to figure out what to do - esp when something you bought earlier in the day for $0.10 can be closed out at $2.00.