What happens when the ES Index futures options are exercised ?

[etradeqeko]

Hi guys, what happens when the ES Index futures options are exercised ?

1.Long options
2. Short options

 

[Robert Morse]

1. Long ES
2. Short ES

 

[etradeqeko]

1. Long ES
2. Short ES

Thank you Robert.

Is the Long ES optional or not ? Because by definition a call is right to buy something ? So if I do not choose to exercise what happens on the last day of this ? (I realize I said exercise, but suppose I do not exercise and it is ITM, will it still be long ES ? )

Also what happens for this if the call is OTM ?

 

[SumZero]

I would divide both points.

1. Long options (if you are the one exercising)
a) Long call -> Long ES
b) Long put -> Short ES

2. Short options (if others are exercising against you)
a) Short call -> Short ES
b) Short put -> Long ES

 

[etradeqeko]

Thank you guys,

Also what happens once the options are exercised and we are long or short ES ? How is this ES long or short settled ?

 

[SumZero]

It's an absolutely normal ES contract, cash settled

 

[Robert Morse]

Is the Long ES optional or not ?

NO. I think sometime this year or last, the CME got rid of exercise exceptions. You should call them and confirm.

 

[MarkBrown]

if your trading futures you would be well server to study the series 3 exam it would help you immensely.

 

[etradeqeko]

Hi guys

Once the option is exercised automatically and the futures long position is established, is the futures contract also automatically settled? Or will it roll into the next quarter ?

 

[Robert Morse]

You get a futures contract with whatever settle comes with that contract. ES futures are cash settled, so there is no roll from the CME.