To exercise an option is to implement the right under which the holder of an option is entitled to buy Call option or sell Put option the underlying security. Options are exercised through the Option Exercise window accessible from the Trade menu in the trading platform.
To avoid deliveries in expiring option and future option contracts, customers must roll forward or close out positions prior to the close of the last trading day.
Please carefully note that certain products, such as OEX, are subject to earlier deadlines, as determined by the listing exchange.
Exercise requests for all such products should be submitted well in advance of the exchange deadline, in order to ensure timely notification to the exchange by the broker. To protect against these scenarios as expiration nears, the broker will simulate the effect of expiration assuming plausible underlying price scenarios and evaluating the exposure of each account after settlement.
Accounts determined to violate the broker's margin requirement due to the projected effect of settlement may be subject to a series of protective actions on the part of broker, including: In the event that you are holding a call spread long and short calls in the same underlying prior to an ex-dividend date in the underlying, and if you have not liquidated the spread or exercised the long call s , IB reserves the right to: In the event that IB exercises the long call s in this scenario and you are not assigned on the short call s , you could suffer losses.
Likewise, if IB liquidates some or all of your spread position you may suffer losses or incur an investment result that was not your objective. In order to avoid this scenario, you should carefully review your option positions and your account equity prior to any ex-dividend date of the underlying and you should manage your risk and your account accordingly.
For more detailed information, and examples, of delivery restrictions, please click here. Use the Option Exercise window to either: You must also use the TWS Option Exercise window to instruct the clearinghouse to exercise an option contrary to the clearinghouse's accepted policy on an options Expiration day e. If you do not use the TWS Option Exercise window to manually manipulate options, the clearinghouse will handle the exercise automatically in the manner described below:.
The broker must receive "contrary intentions" from you through the Option Exercise window if you want to:. IB SM , InteractiveBrokers.
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Supporting documentation for any claims and statistical information will be provided upon request. Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations. The risk of loss in online trading of stocks, options, futures, forex, foreign equities, and bonds can be substantial. Options involve risk and are not suitable for all investors.
Before investing in options, read the "Characteristics and Risks of Standardized Options". For a copy visit http: Before trading, clients must read the relevant risk disclosure statements on our Warnings and Disclosures page - http: Trading on margin is only for sophisticated investors with high risk tolerance.
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You may lose more than your initial investment. For additional information regarding margin loan rates, see http: Security futures involve a high degree of risk and are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading security futures, read the Security Futures Risk Disclosure Statement.
There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades.
The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.
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Delivery, Exercise and Corporate Actions. Both option exercises and lapses are irrevocable. For Equity Option Contracts Traded upon: The broker must receive an Exercise Request by: North America US Options Exchanges For Future Option Contracts Traded upon: Early Exercise The broker must receive an Exercise Request by: For Options Traded On Us Exchanges And Cleared Through Options Clearing Corporation OCC: The broker must receive "contrary intentions" from you through the Option Exercise window if you want to: Exercise a stock option or index option that is out of the money.
For Options Traded On Canadian Exchanges And Cleared Through Canadian Derivatives Clearing Corporation CDCC: Stock options expiring in the current month that are 0. All index options expiring in the current month that are in the money by any amount will be automatically exercised by the CDCC without the need for any explicit instructions from the customer.
The CDCC must receive "contrary intentions" through the Option Exercise window if you want to: Exercise a stock option that is in the money by less than 0. Notify CDCC that you do not want to exercise a stock option that is 0. For Equity Options Traded On Eurex And Cleared Through Eurex Clearing Ag ECC: Stock options expiring in the current month that are more than 10 basis points in the money will be automatically exercised by the ECC without the need for any explicit instructions from the broker.
Index options expiring in the current month that are more than 0. The ECC must receive "contrary intentions" through the Option Exercise window if you want to: Exercise a stock option that is in the money by 10 basis points OR LESS.
For Equity Options Traded On Liffe And Cleared Through London Clearing House LCH: Stock options expiring in the current month that are more than 1 pence in the money will be automatically exercised by the LCH without the need for any explicit instructions from the broker. Index options expiring in the current month that are more than 1 pence in the money will be automatically exercised by the LCH without the need for any explicit instructions from the broker.
The LCH must receive "contrary intentions" through the Option Exercise window if you want to: Exercise a stock option that is in the money by 1 pence OR LESS. For Equity Options Traded On Euronext And Cleared Through Clearnet Sa CNET: Stock options expiring in the current month that are more than 0. For Equity Options Traded On Sehk And Cleared Through SEHK Options Clearing House SEOCH: Stock options expiring in the current month that are 1.
The SEOCH must receive "contrary intentions" through the Option Exercise window if you want to: Exercise a stock option that is in the money by less than 1. Exercise a stock option that is out of the money. Disclosures "Contrary intentions" are handled on a best efforts basis. In the event that an option exercise cannot be submitted via the trading platform, an option exercise request with all pertinent details including option symbol, account number and exact quantity , should be created in a ticket via the Account Management window.
The ticket should include the words "Option Exercise Request" in the subject line. Please provide a contact number and clearly state in your ticket why the Option Exercise window was not available for use. Investors' Marketplace Investor Relations Careers Site Map System Status.
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