I was long 10 x CGC Sep 20 $25.50 Puts; the price was bouncing above/below $25.50 as markets closed and there was activity just after close around that level...so I was sitting there at 4:05pm unsure of what price would be used to determine whether those Puts would be auto-exercised (by IB) or not. They ultimately were not, and indeed sources like Yahoo show yesterday's close as $25.56, but yesterday there were several sources -- I forget which, I looked at several -- appearing to show the closing price as $25.42, which would have meant auto-exercise, and thus being short like $25K CGC over the weekend, which I didn't really want. So I want to know whether there's anywhere I can go just after markets close on expiration-Friday where I can see what the 'official' close is going to be considered for option auto-exercise purposes. Is that something posted by OCC or some other body on Fridays? (Because knowing definitively whether they're going to be exercised would have let me take corresponding action, e.g. buying 1,000 CGC in after-hours trading, to avoid big short position Monday.)
Where can I see the official closing price used for option auto-exercise on Fridays after close?
- Thread starter d0rian
- Start date
Quick follow-up -- I know that IB provides the ability to transmit "force Lapse" or "force exercise" instructions for options that are slightly ITM / OTM respectively, which would ostensibly give you control over this...but I feel as though reps have given me slightly different feedback on whether those options are available AFTER 4pm on expiration-Friday. IIRC, at least one rep told me that if such instructions are submitted post-close, IB attempts to obey them on a "best efforts" basis...which I interpreted to mean that I still would have to live with some uncertainty about whether the positions would be exercised or not. Am I wrong about this? I.e. can lapse/exercise instructions still be submitted post-close (and if so, what's the time cutoff for such?) (FWIW, going forward I'm going to try and just close these ATM positions before markets close to avoid this issue...)
https://www.nasdaq.com/articles/aut...nd-other-options-expiration-issues-2010-11-18
After-Hours Activity
Question #1: what happens if the stock price moves after 4 p.m. Eastern Time on Friday? Well, this is where it starts to get interesting. As any of you who trade in the after-hours market know, stocks continue to trade after the bell. Option strikes can move from out-of-the-money to in-the-money, or vice versa.
Trust me, the professionals in this market watch this very closely. They have approximately 1.5 hours after the close to make their decision on whether or not to exercise. The most common examples of this behavior are with ETFs like the Spiders (NYSE:SPY) and the PowerShares QQQ Trust (NASDAQ:QQQQ). These options even trade through 4:15 p.m. Eastern, but the options are settled based on the 4 p.m. close. Because of this, you might be assigned on an option you are short when you don’t expect it.
Small moves in broad-based ETFs are risky, but probably controlled. However, when there is an unexpected event right after the close on an expiration Friday, things can get really crazy. Over the years I have been trading, there have been a handful of instances where a major event (think FDA ruling) occurs that moves a stock a huge percentage. The stock might close at $51, but if a drug is approved, the stock could be trading at $73 after the close.
In this instance, one could expect to get short calls assigned even at the $55, $60, $65, and $70 strikes. All of them might not be assigned, because if the person long the calls did not realize what happened, he may not call in to exercise them. Again, this is very rare, but it has happened. For those who tend to be sellers of options, please remember: YOU DO NOT CONTROL WHETHER OR NOT YOU GET ASSIGNED … EVER. If something happens, you are at the whim of the people long the options.
After-Hours Activity
Question #1: what happens if the stock price moves after 4 p.m. Eastern Time on Friday? Well, this is where it starts to get interesting. As any of you who trade in the after-hours market know, stocks continue to trade after the bell. Option strikes can move from out-of-the-money to in-the-money, or vice versa.
Trust me, the professionals in this market watch this very closely. They have approximately 1.5 hours after the close to make their decision on whether or not to exercise. The most common examples of this behavior are with ETFs like the Spiders (NYSE:SPY) and the PowerShares QQQ Trust (NASDAQ:QQQQ). These options even trade through 4:15 p.m. Eastern, but the options are settled based on the 4 p.m. close. Because of this, you might be assigned on an option you are short when you don’t expect it.
Small moves in broad-based ETFs are risky, but probably controlled. However, when there is an unexpected event right after the close on an expiration Friday, things can get really crazy. Over the years I have been trading, there have been a handful of instances where a major event (think FDA ruling) occurs that moves a stock a huge percentage. The stock might close at $51, but if a drug is approved, the stock could be trading at $73 after the close.
In this instance, one could expect to get short calls assigned even at the $55, $60, $65, and $70 strikes. All of them might not be assigned, because if the person long the calls did not realize what happened, he may not call in to exercise them. Again, this is very rare, but it has happened. For those who tend to be sellers of options, please remember: YOU DO NOT CONTROL WHETHER OR NOT YOU GET ASSIGNED … EVER. If something happens, you are at the whim of the people long the options.
You can contact IB until 16:30 (30 minutes after close) to let them know you want to let the options expire without exercise.
https://www.interactivebrokers.com/en/?f=deliveryExerciseActions
https://ibkr.info/article/1718#What_if_I_have_a_long_option_which_I_do_not_want_exercised_
I didn't read the link you provided but it's from 2010. Rules change. Too outdated to be reliable IMO.
doesn't matter the hours, the concept remains
Thanks for the replies, and I'd actually coincidentally already found/read that link while searching for an answer...yes, I already understand the concept of after-hours risk on expiration Fridays -- yet another reason to close out, whenever possible (within reason) of any short positions anywhere near the money.
That still doesn't address my original Q, though, of whether there's any source -- in the post-4pm window on expiration Fridays -- where I can see the definitive / 'official' closing price that will be used by brokers to determine whether options are ITM/OTM for auto-exercise purposes. (It seems like that info should be available more or less immediately upon close...but as I noted in my OP, a handful of different sites showed different 'closing' prices for the underlying...)
In TWS, open the Time & Sales window. Make sure "Exchange and Condition" is selected in the settings. You're looking for the trade where the condition is 6, indicating the closing auction. For CGC on Friday, this was at 16:04:15, with 299,141 shares trading at 25.56.
Thanks, this is helpful -- am I understanding correctly that the 'closing auction' doesn't occur immediately at 4pm or just prior? So the 'official' closing price isn't determined until ~5 mins after 4pm?
The auction begins before 4PM and is usually concluded right at 4PM or a few seconds later, but it can go later if there is an order imbalance. This one was on the later end. If you're interested in the details, Alaric Trader has a good write-up.