Q & A. Expiring Worthless

Mark,

I have written a covered
call. At this point it is in the money. When the expiration date arrives if the
stock has not been called away is there anything I need to do to close the
position? Or will it expires worthless if it is not exercised?

Thanks

John

 

Hi John,

Good
question.

If
it’s not exercised, it expires worthless. There is nothing more for you to do.

If
you have access to your brokerage account over expiration weekend, you will notice
that the option is still in your account on Saturday. DO NOT assume that it has not been exercised.

It
will not officially disappear from your account before Sunday, or sometimes
Monday morning. The reason is because
Saturday is the true expiration date and expiring positions are not removed
from your account until after Saturday.

If it is exercised, then both your stock position and the option will disappear from your account on Sunday or Monday.  In it's place will be the cash you receive for selling your shares at the strike price.

Mark

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