Because options expire on the Saturday after the
third Friday of the expiration month, the last day to trade or
exercise those options is the third Friday of the month.
If you plan on exercising your options just before
expiration, be sure to check your brokerage firm's cut-off
times, since firms usually enforce early deadlines that allow
them enough time to process exercise orders before the end of
Friday's trading.
The exercise process
When you notify your brokerage firm that you'd
like to exercise your option:
Your brokerage
firm sends the exercise notice on to the Options
Clearing Corporation (OCC), the official buyer
and seller of all options contracts.
The OCC randomly
assigns your contract to one of its member firms that has
a writer of the option you hold.
If that brokerage
firm has more than one writer, it chooses among the writers
either randomly or using some other approved policy it has
adopted.
The writer who
is assigned on a call must deliver shares of the underlying
instrument and a writer who is assigned on a put must deliver
the cash needed to buy shares. In the case of a cash-settled
option, the writer delivers money rather than securities.
Your brokerage
account is adjusted to reflect your purchase or sale of the
underlying investment.
Quadruple
witching day Stock
options, stock index options, stock index futures,
and single stock futures all expire on the third Friday
of March, June, September, and December. This day
is known as quadruple witching day, and trading volume
on the markets is usually high as investors act to meet
the deadline for trade or exercise.
Stock
options, stock index options, stock index futures,
and single stock futures all expire on the third Friday
of March, June, September, and December. This day
is known as quadruple witching day, and trading volume
on the markets is usually high as investors act to meet
the deadline for trade or exercise.