Option Expiration

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

  1. urrterrible

    urrterrible

    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
     
    #1     Dec 15, 2011
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  2. Roark

    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).
     
    #2     Dec 15, 2011
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  3. urrterrible

    urrterrible

    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%.
     
    #3     Dec 15, 2011
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