The exercise of a Option means that the holder of the option exercises his right to purchase the underlying security (Call option) or for sale (Put option). Options are exercised via the option exercise window in the Trader Workstation, which you can access via the "Trade" menu in the trading platform.
Please note: Both the exercise and the bringing about of the expiration of an option are irrevocable.
To avoid deliveries on expiring options and futures options, customers must extend or close their positions before the close of trading on the last trading day.
Important: There is no automatic execution (auto exercise) - in-the-money options must be actively exercised by the trader.
Requests to exercise and bring about the expiration of an option may be submitted (whether received through the option exercise window or submitted by ticket from the Account Management Message Center¹) as follows:
Stock options
| For stock options on the following trading venues... | ... the exercise request must be received by the broker by the following deadline: |
| North America | 5:25 p.m. EST (US Eastern Standard Time) |
| US Options Exchanges | 5:25 p.m. EST (US Eastern Standard Time) |
| Montreal Exchange | 4:30 PM EST (US Eastern Standard Time) |
| Europe | |
| Euronext | 17:50 CET (Central European Time) |
| Eurex (Germany and Switzerland) | 17:50 CET (Central European Time) |
| IDEM | 17:50 CET (Central European Time) |
| LIFFE | 17:50 CET (Central European Time) |
| MEFF | 17:50 CET (Central European Time) |
| Sweden | 17:50 CET (Central European Time) |
| Asia Pacific | |
| Australia | 16:25 Australian time / NSW |
| Japan | 16:00 JST (Japan Standard Time) |
Notes:
Please be sure to note that for certain products, e.g. OEX, earlier deadlines apply in accordance with the regulations of the respective exchange on which the product is listed. Exercise requests for these products should be submitted well in advance of the exchange's deadline to ensure that the broker can notify the exchange in good time.
Future options
| For futures options on the following trading venues... | Early exercise | ... the exercise request must be received by the broker by the following deadline: |
| North America - NYMEX | N/A | 3:30 PM EST (US Eastern Standard Time) |
| North America - GLOBEX/ECBOT | N/A | 4:30 PM EST (US Eastern Standard Time) |
| Japan - TSEJ | Yes | 15:30 JST (Japan Standard Time) |
Disclosure
- "Contrary Intentions" will be handled to the best of our ability.
¹If an option exercise cannot be submitted via the trading platform, an option exercise request with all relevant information (including: option symbol, account number and exact quantity) should be sent as a ticket via the account management window. Click on "Request/Problem Ticket" in the account management window. You should include the keyword "Request for Option Exercise" in the subject line of the ticket. Please include a contact number and clearly explain in your ticket why you were unable to use the option exercise window.
Exercise when due and note on activities
The Broker does not support option exercises, allocations, deliveries, or otherwise settlement procedures that the Broker believes would result in undue risk or operational risk/difficulty. To protect against such scenarios in advance of a maturity date, the Broker simulates the impact of expiration assuming plausible price scenarios and evaluates the potential risk of each account after settlement. If an account is determined to be in violation of the Broker's margin requirements based on the anticipated effect of settlement, the Broker may take a number of protective actions with respect to that account, such as: Liquidations of maturing positions on the last trading day, expiration (non-exercise) of in-the-money long option positions, immediate liquidation of underlying positions with delivery on/after the option's last trade date, liquidation of positions to the extent necessary to eliminate a margin shortfall after maturity, and limiting trading activity in the account to position-closing transactions only.
If you hold a Call Spread (Long and Short Calls for the same Underlying) prior to an Ex-Date of the Underlying and if you have neither liquidated the Spread nor exercised the Long Call(s), IB reserves the right to: i) exercise one, more or all of the Long Call(s), and/or ii) liquidate all or part of the Spread (i.e. i.e., close) - if IB, in its sole discretion, concludes that: a) it is likely that the short call(s) will be allocated; and b) your account would not have sufficient funds to meet the dividend payment obligation or margin requirements generally. If IB executes the long call(s) in this scenario and you do not receive an allocation for the short call(s), you may incur losses. If IB liquidates all or part of your spread position, it is also possible that you may incur losses or achieve an investment result that does not speak to your original intentions. To prevent this situation, you should carefully review your options portfolio and account principal for ex-days of underlying assets and manage your account and risk appropriately.
Instructions for exercising options at maturity
In the Option Exercise Window, you may either (i) exercise an option prior to the expiration date, or (ii) notify the Clearing House of "Contrary Intentions" to the options held, e.g. to the Options Clearing Corporation (OCC) for options on U.S. exchanges. The option exercise window must also be used to instruct the clearing house regarding an option exercise contrary to the clearing house's usual procedures on an option due date (e.g. "Expiration Friday" for U.S. options). If you do not use the TWS option exercise window for manual option instructions, clearinghouses automatically follow the following procedures:
OCC (USA)
For options traded on U.S. options exchanges and cleared through the Options Clearing Corporation (OCC):
- Stock options that mature in the current month and are in-the-money by $0.01 or more are automatically exercised by OCC without the need for an explicit instruction from the broker.
- Index options that mature in the current month and are in-the-money by $0.01 or more will be automatically exercised by OCC without the need for an explicit instruction from the broker.
You must explicitly notify the broker of "contrary intentions" via the option exercise window if you:
- wish to avoid exercising a stock or index option that is in-the-money by $0.01 or more.
- wish to exercise a stock or index option that is in-the-money by less than $0.01.
- wish to exercise a stock or index option that is out of the money.
CDCC (Canada)
For options traded on Canadian exchanges and cleared through the Canadian Derivatives Clearing Corporation (CDCC):
- Stock options that mature in the current month and are in-the-money by $0.01 CAD or more are automatically exercised by CDCC without the need for an explicit instruction from the customer.
- Index options that mature in the current month and are in-the-money (regardless of the amount) will be automatically exercised by CDCC without the need for an explicit instruction from the customer.
You must explicitly notify the CDCC of "contrary intentions" via the option exercise window if you:
- wish to exercise a stock option that is in the money by less than 0.01 CAD.
- wish to exercise a stock or index option that is out of the money.
- Notify the CDCC if you do not wish to exercise a stock option that is in the money by 0.01 CAD or more.
ECC (Germany and Switzerland)
For equity options traded at Eurex and cleared through Eurex Clearing AG (ECC):
- Stock options that mature in the current month and are in-the-money by more than 10 basis points are automatically exercised by ECC without the need for an explicit instruction from the broker.
- Index options that mature in the current month and are in-the-money by more than 0.01 will be automatically exercised by the ECC without the need for an explicit instruction from the broker.
You must explicitly notify ECC of "contrary intentions" via the option exercise window if you:
- wish to exercise a stock option that is in the money by only 10 basis points or less.
- wish to exercise a stock or index option that is out of the money.
LCH (Great Britain)
In the case of stock options traded on Liffe and settled via the London Clearing House (LCH):
- Stock options that mature in the current month and are in-the-money by more than 1 penny will be automatically exercised by the LCH without the need for an explicit instruction from the broker.
- Index options that mature in the current month and are in-the-money by more than 1 penny will be automatically exercised by the LCH without the need for an explicit instruction from the broker.
You must explicitly notify LCH of "contrary intentions" via the option exercise window if you:
- wish to exercise a stock option that is in the money by 1 penny or less.
- wish to exercise a stock or index option that is out of the money.
CNET (Belgium, France, Germany, Netherlands)
For stock options traded on Euronext and settled through Clearnet SA (CNET):
- Stock options that mature in the current month and are in-the-money by more than 0.01 will be automatically exercised by CNET without the need for an explicit instruction from the broker or its customer.
- Index options that mature in the current month and are in-the-money by more than 0.01 will be automatically exercised by CNET without the need for an explicit instruction from the broker or its customer.
SEOCH (Hong Kong)
In the case of stock options traded on the SEHK and cleared through the SEHK Options Clearing House (SEOCH):
- Stock options that mature in the current month and are in-the-money by 1.5% or more will be automatically exercised by the SEOCH without the need for an explicit instruction from the broker.
You must explicitly notify the SEOCH of "contrary intentions" via the option exercise window if you:
- wish to exercise a stock option that is in the money by less than 1.5%.
- wish to exercise a stock option that is out of the money.