Option Expiration

Discussion in 'Options' started by urrterrible, Dec 15, 2011.

  1. If I have an option that is in the money and I do nothing, will my brokerage firm default into buying the shares at the strike price and hold them in my account?

    I never understand exactly how an options contract finishes if you hold it and do not unwind the contracts.

    Thanks for any help
  2. Roark


    Which broker are you using? From IB:

    If the option is in-the-money at expiration by 0.01 or more, it will be automatically exercised on your behalf (unless you previously chose to lapse the option) by the Options Clearing Corporation (OCC).
  3. Thanks and yes using IB. Are the other brokerages relatively the same?

    I am going to slap a ratio spread on some of my longer term holdings.

    One i am looking at is EMR

    Own stock
    Buy 2 47 strike calls exp. Jan 2013
    Sell 3 52.50 strike calls exp 2013

    This basically keeps downside identical to owning shares alone but gives me 3x performance capped at 28%-30%.