The rule of U.S. stock option exercise
Exercising rules for options at the end of the day (expiration date):
When clients intend to exercise options on the expiration date, they must ensure that they have sufficient buying power in their accounts to complete the relevant transactions. Based on risk management considerations, uSmart Securities reserves the following rights:
1. Close out clients' in-the-money options or out-of-the-money options that are close to in-the-money;
2. Reserve the right not to exercise options even if they are in-the-money.
|
Option type |
Whether to support exercise and passive exercise |
Explanation of the exercise rules on expiration day |
|
long call |
Yes |
In-the-money and the exercise margin is sufficient |
|
long put
|
No |
Exercising is not supported |
|
short call
|
Naked Call Option Selling No |
In-the-money and passive exercise is not supported |
|
Covered Call Yes |
Selling call options while holding a long position in the underlying stock creates a covered call. A cover call can reduce the margin requirements for the call option. |
|
|
short put |
Yes |
In-the-money and passive exercise is supported, buy the corresponding amount of stocks at the exercise price |
Please note: Although the option products provided by our company are all American options, our company is currently unable to provide early exercise services. Stock transactions related to option exercise upon expiration (if applicable) will start calculating T+1 from the next trading day after the expiration date.
