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Will My Option Be Exercised?

Robert Thorne • • 7 min read
Will My Option Be Exercised?

If the option expires profitable or in the money, the option will be exercised. If the option expires unprofitable or out of the money

out of the money
"Out of the money" (OTM) is an expression used to describe an option contract that only contains extrinsic value. ... Alternatively, an OTM put option has a strike price that is lower than the market price of the underlying asset. OTM options may be contrasted with in-the-money (ITM) options.
, nothing happens, and the money paid for the option is lost. A put option increases in value, meaning the premium rises, as the price of the underlying stock decreases.

How long does it take for an option to be exercised?

Even though there is only one day to exercise your contract, you can always close out your option position in the market on any day prior to expiration.

Do options get exercised automatically?

Option Auto-Exercise Rules

Stock options that are in-the-money at the time of expiration will be automatically exercised. ... For example, if you own a call option with a strike price of $50, and the stock closes at $50.01 on the day your call expires, we will exercise your option.

Robert Thorne
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Robert Thorne

Robert Thorne covers electric vehicle innovations, autonomous driving systems, global mobility trends, and automotive engineering developments.