Whether an option is auto exercised is based on the stocks 4pm close, but the closing price might occur just after 4pm.
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Playing the after hours market with expiring options
- Thread starter FSU
- Start date
Whether an option is auto exercised is based on the stocks 4pm close, but the closing price might occur just after 4pm.
i once sold a put option, it is out of money at 4pm, but after the market, it moves down a lot, made the option in the money. in the end, the option did not expire worthless if calculated using 4pm, it is exercised which gave me a big loss.
Doesn't really matter. If you give instructions to exercise (I am sure that's the intention after shorting those shares) they have to, as long as you have the funds.
so if I buy 1 tsla 750 call, at 4pm, it is 749.5, so it expires out of the money. but after market it goes to 751, so I can ask broker to exercise the option (i get 100 shares)? how about if after the 4pm, tsla goes further down to 748, can I still ask broker to exercise the option( even though no one would do it)?
so if I buy 1 tsla 750 call, at 4pm, it is 749.5, so it expires out of the money. but after market it goes to 751, so I can ask broker to exercise the option (i get 100 shares)? how about if after the 4pm, tsla goes further down to 748, can I still ask broker to exercise the option( even though no one would do it)?
Yes, you can ask the broker to exercise even if it is out of the money. Your earlier statement said you shorted the stock when it came above 750. You might as well cover when it came back down to 748 and leave your option expire.
There have been some opportunities lately buying cheap options on expiration day, a few minutes before the close and then trading the after hours market in the stock. For example in Tesla the just out of the money puts and calls, that appear to be worthless, were trading around .10 on Friday. If you buy these it allows you to trade the after hours market of the stock. Tesla had a range of about 6 after hours Friday, so you would have been able to make some money doing this. SPY is another good candidate.
If you consider this trade, make sure you know your brokers cutoff time in accepting exercises and how to submit them. The OCC has a 530pm et deadline, but most brokers will have an earlier cutoff time. Also it will help with the margin on buying the stock if you have a PM account.
Thanks for the hint. It is not the first time you discuss openly about actionable idea and I really wish to thank you for this. I have just one question. What broker do you use? I have IB and usually they start to liquidate my positions that could lead to an assignment a few hours after the market opens.
My main account is through Dash Prime, clearing through Apex. I also have an IB account that I use for futures and for trading SPX options after hours and a TD account.Thanks for the hint. It is not the first time you discuss openly about actionable idea and I really wish to thank you for this. I have just one question. What broker do you use? I have IB and usually they start to liquidate my positions that could lead to an assignment a few hours after the market opens.
You are not really trading the options in the after hours market, you are trading stock in the after hours market against options you traded before the market closes. Most brokers allow access to this after hours market. What you want to check is what is the cutoff time the broker requires for option exercises.Thanks FSU. I noticed that Dash Prime mentions "minimum account size of $100,000" which is out of my range for a single investment. Do you know any retail brokers with lower account minimums, that allow trading expiring options in the after hours market? I'm looking through this now
You are not really trading the options in the after hours market, you are trading stock in the after hours market against options you traded before the market closes. Most brokers allow access to this after hours market. What you want to check is what is the cutoff time the broker requires for option exercises.
do you know IB's cut time for option exercise?
I do notdo you know IB's cut time for option exercise?