What Is the Process of 'Automatic Exercise' for Options That Are In-the-Money at Expiration? ▴ Learn

What Is the Process of ‘Automatic Exercise’ for Options That Are In-the-Money at Expiration?

Automatic exercise is the standard procedure where options that expire In-The-Money (ITM) by a predetermined amount (e.g. $0.01) are automatically exercised by the clearing house on behalf of the holder.

This ensures the holder receives the intrinsic value. OTM options are not automatically exercised, as they have no intrinsic value.

Define “In-the-Money,” “At-the-Money,” and “Out-of-the-Money” for a Written Call Option

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What Is the Process of ‘Automatic Exercise’ for Options That Are In-the-Money at Expiration?

What Is the Process of ‘Automatic Exercise’ for Options That Are In-the-Money at Expiration?

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