Delivery, Exercise and Corporate Actions

Options Exercise


To exercise an option is to implement the right under which the holder of an option is entitled to buy (Call option) or sell (Put option) the underlying security. Options are exercised through the Option Exercise window (accessible from the Trade menu in the trading platform).

Please note: Both option exercises and lapses are irrevocable.

To avoid deliveries in expiring option and future option contracts, customers must roll forward or close out positions prior to the close of the last trading day.

Option Exercise & Option Lapse Requests (whether received through an Option Exercise window or by a ticket sent via Account Management/Message Center 1) may be submitted as follows:


For Equity Option Contracts Traded upon: The broker must receive an Exercise Request by:
North America US Options Exchanges 16:30 EST
Montreal Exchange 16:30 EST
Europe Euronext 18:00 CET
Eurex (German and Swiss) 18:00 CET
IDEM 18:00 CET
LIFFE 18:00 CET
MEFF 18:00 CET
Sweden 18:00 CET
Asia Pacific Australia 17:15 Australia/NSW
Japan 15:40 JST
(send a ticket and call Customer Service)

Notes:

Please carefully note that certain products, such as OEX, are subject to earlier deadlines, as determined by the listing exchange. Exercise requests for all such products should be submitted well in advance of the exchange deadline, in order to ensure timely notification to the exchange by the broker.



For Future Option Contracts Traded upon: Early Exercise
The broker must receive an Exercise Request by:
North America NYMEX N/A 15:30 EST
North America GLOBEX/ECBOT N/A 16:30 EST
Japan TSEJ Yes 15:30 JST
(send a ticket and call Customer Service)


Expiration Exercise and Activity Notice

The broker does not support option exercises, assignments, deliveries or other effects of settlement that the broker determines may result in undue risk or operational risks/concerns. To protect against these scenarios as expiration nears, the broker will simulate the effect of expiration assuming plausible underlying price scenarios and evaluating the exposure of each account after settlement. Accounts determined to violate the broker's margin requirement due to the projected effect of settlement may be subject to a series of protective actions on the part of broker, including: liquidation of expiring positions on the last trade date; lapsing (non-exercise) of long in-the-money options; immediate liquidation of underlying positions subject to delivery on/after the option last trade date; liquidation of positions necessary to resolve a post-expiration margin deficit; and restricting the account to closing transactions.

For more detailed information, and examples, of delivery restrictions, please click here.



Expiration Option Exercise Instructions

Use the Option Exercise window to either: (i) exercise an option prior to expiration, or (ii) deliver "contrary intentions" to the clearinghouse for the options held; e.g., The Options Clearing Corporation ("OCC") for options traded on U.S. options exchanges. You must also use the TWS Option Exercise window to instruct the clearinghouse to exercise an option contrary to the clearinghouse's accepted policy on an options Expiration day (e.g., Expiration Friday for US options). If you do not use the TWS Option Exercise window to manually manipulate options, the clearinghouse will handle the exercise automatically in the manner described below:



OCC (United States)
For Options Traded On Us Exchanges And Cleared Through Options Clearing Corporation (OCC):
  • Stock options expiring in the current month that are $0.01 or more in the money will be automatically exercised by the OCC without the need for any explicit instructions from the broker.
  • Index options expiring in the current month that are $.01 or more in the money will be automatically exercised by the OCC without the need for any explicit instructions from broker.

The broker must receive "contrary intentions" from you through the Option Exercise window if you want to:

  • Avoid the exercise of a stock option or index option that is in the money by $0.01 or more.
  • Exercise a stock option or index option that is in the money by LESS than $0.01.
  • Exercise a stock option or index option that is out of the money.


CDCC (Canada)
For Options Traded On Canadian Exchanges And Cleared Through Canadian Derivatives Clearing Corporation (CDCC):
  • Stock options expiring in the current month that are 0.01 CAD or more in the money will be automatically exercised by the CDCC without the need for any explicit instructions from the customer.
  • All index options expiring in the current month that are in the money by any amount will be automatically exercised by the CDCC without the need for any explicit instructions from the customer.

The CDCC must receive "contrary intentions" through the Option Exercise window if you want to:

  • Exercise a stock option that is in the money by less than 0.01 CAD.
  • Exercise a stock option or index option that is out of the money.
  • Notify CDCC that you do not want to exercise a stock option that is 0.01 CAD or more in the money.


ECC (Germany, Switzerland)
For Equity Options Traded On Eurex And Cleared Through Eurex Clearing Ag (ECC):
  • Stock options expiring in the current month that are more than 10 basis points in the money will be automatically exercised by the ECC without the need for any explicit instructions from the broker.
  • Index options expiring in the current month that are more than 0.01 in the money will be automatically exercised by the ECC without the need for any explicit instructions from the broker.

The ECC must receive "contrary intentions" through the Option Exercise window if you want to:

  • Exercise a stock option that is in the money by 10 basis points OR LESS.
  • Exercise a stock option or index option that is out of the money.


LCH (United Kingdom)
For Equity Options Traded On Liffe And Cleared Through London Clearing House (LCH):
  • Stock options expiring in the current month that are more than 1 pence in the money will be automatically exercised by the LCH without the need for any explicit instructions from the broker.
  • Index options expiring in the current month that are more than 1 pence in the money will be automatically exercised by the LCH without the need for any explicit instructions from the broker.

The LCH must receive "contrary intentions" through the Option Exercise window if you want to:

  • Exercise a stock option that is in the money by 1 pence OR LESS.
  • Exercise a stock option or index option that is out of the money.


CNET (Belgium, France,Germany, Netherlands)
For Equity Options Traded On Euronext And Cleared Through Clearnet Sa (CNET):
  • Stock options expiring in the current month that are more than 0.01 in the money will be automatically exercised by CNET without the need for any explicit instructions from the broker or its customers.
  • Index options expiring in the current month that are more than 0.01 in the money will be automatically exercised by the CNET without the need for any explicit instructions from the broker or its customers.


SEOCH (Hong Kong)
For Equity Options Traded On Sehk And Cleared Through SEHK Options Clearing House (SEOCH):
  • Stock options expiring in the current month that are 1.5% or more in the money will be automatically exercised by the SEOCH without the need for any explicit instructions from the broker .

The SEOCH must receive "contrary intentions" through the Option Exercise window if you want to:

  • Exercise a stock option that is in the money by less than 1.5%.
  • Exercise a stock option that is out of the money.
Disclosures
  • "Contrary intentions" are handled on a best efforts basis.
  1. In the event that an option exercise cannot be submitted via the trading platform, an option exercise request with all pertinent details (including option symbol, account number and exact quantity), should be created in a ticket via the Account Management window. In the Account Management window, click on "Inquiry/Problem Ticket". The ticket should include the words "Option Exercise Request" in the subject line. Please provide a contact number and clearly state in your ticket why the Option Exercise window was not available for use.