In the index market, it is the value of the index at expiration. For many indexes, the settlement value is computed on Friday morning and, for that reason, the last day to trade some index options is on a Thursday before expiration.
See Also: Exercise Price, Automatic Exercise
When an option seller or writer receives an exercise notice, assignment has occurred. When assigned, writers must deliver the goods (shares or cash). For example, let’s say you sold 1 AAPL 145.00 CALL and the buyer decides to exercise the contract at expiration because AAPL is now trading at 146, you would need to deliver…
How Do You Find Option Sweeps? There are two ways you can go about finding Option Sweeps: If you go with option 1 then you need to set your filters to look for repeat activity in a stock and then you will have to tabulate the total number of contracts that are bought across all…
A capped option will be automatically exercised prior to expiration if the options market on which the option is trading determines that the value of the underlying interest at a specified time on a trading day “hits the cap price” for the option. Capped options may also be exercised, like European-style options, during a specified…
There are some options settle for cash rather than shares. Indexes like the S&P 500 Index (.SPX) and the S&P 100 Index (.OEX) are examples of cash settled options.
These are options contract with no intrinsic value. A Call option is OTM when the strike price is above the current market price. A Put option is out-of-the-money when their strike price is below the current market price of the current market price. You should also check out In The Money Options & At the…
If you sell a certain type of option and you already have or get the thing you’re supposed to sell through that option, you’re called a covered call writer. EXAMPLE: An individual owns 100 shares of XYZ common stock. If she writes one physical delivery XYZ call option—giving the call holder the right to purchase…
