Interactive brokers says: odd month options on emini convert to a front month futures contracts at expiration front month options contracts "convert to cash" at expiration. Here is my question. I want to buy a feb or mar 1000 put on emini (obviously out of the money). I am perfectly happy if it expires worthless...but why would I buy an option that could actually expire "less than worhless"? Should I anticipate this possibility? Thank you for any clarifications. I am especially hoping someone who has actually been through an emini options expiration would reply. Manny
if your analysis was correct the options for that 'off' month would behave like underlying futures contracts rather than like options.... that can't be. So, what must be the case is that the stated policy which you referenced above must only apply to ITM options...which are the only options that anyone cares about at expiration.
Thank-you, Stockapprentice, I hope you are right. If anyone can confirm Stockapprentice's theory I would be deeply grateful. Manny
If you BUY an option, it can only depreciate to zero. You cannot lose more than you pay for the contract.
Makes sense to me. I assume I would also lose the premium in addition to the market value of the option(s) if it expired out of the money?
Buying a put, gives you the right (but not an obligation) to sell the contract's underlying. So all you could lose is the premium you initially paid. The market value just dictates whether you'd want to exercize your option or not. Now if you sold a put that would be different
Instead of options on futures you might consider - Options on S&P500 Index ('SPX') - Options on S&P500 ETF ('SPY') Select options from underlying symbols SPX and/or SPY.
Assuming I wish to let the Put option expire out of the money, I can then ignore the "open position P/L" field regarding the change in option value since I purchased it? It will just "go away" upon exipiration? I will be only be "out" the premium. They will not "sell" the option at its liquidation value for me?
An option that is out of the money has no liquidation value at expiration. It simply expires worthless. Jessie