Many traders who short options/spreads for income are under the mistaken belief that as long as short options expire out-of-the-money (OTM) at 4:00 ET, then there is no risk of assignment of the underlying. That is an incorrect belief. This information-packed Video below will explain that as well as many other related questions, including:
• Rights of Option Buyers and Sellers
• Auto assignment rules per Options Clearing Corp. (OCC) rules, which are based on underlying prices at 4:00 ET
• Option Holder has the right to make an exercise notice to the Broker by the deadline even if the option expired OTM at 4:00 ET
• Exercise Requests (or Contra exercise requests) and deadlines
• What happens in the accounts of Option Buyers & Sellers after expiration
• Broker Risk and closing out of trades by broker prior to market close
• The only 100% way to not get assigned on a short option
• Why it is the Option Holder’s right to make an Exercise Request for any reason up to the deadline for any reason, regardless of where the underlying is trading
This is a tremendous time to profit from trading in the financial markets
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Happy trading! If you have any questions or comments, please e-mail Dan Gibby at Dan@mastertrader.com
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