There is currently no feature available that will automatically enter an early option exercise for you when an American Style option's underlying trades at a specific price. However, accounts that hold dividend-paying positions that may be affected by early exercise will receive a notification via email or IB FYI notification, and in the Option Exercise window in the Optimal Action field approximately two days before the underlying goes ex-dividend. Additionally, option positions in your Watchlist and portfolio that may benefit from early exercise are identified by a yellow lightening icon next to them.
Use the Option Exercise Tool to manually exercise an American style option.
Exercising an equity call option prior to expiration ordinarily provides no economic benefit as:
- It results in a forfeiture of any remaining option time value;
- Requires a greater commitment of capital for the payment or financing of the stock delivery; and
- May expose the option holder to greater risk of loss on the stock relative to the option premium.
Nonetheless, for account holders who have the capacity to meet an increased capital or borrowing requirement and potentially greater downside market risk, it can be economically beneficial to request early exercise of an American Style call option in order to capture an upcoming dividend. You can elect to set up automatic early exercise instructions to collect dividends by logging into Client Portal and opening the Settings page from the Welcome avatar icon at the top right of the portal. From the Account Communication section of Settings open FYI Notifications and check "Dividends - Automatically exercise my options early" to enable.
Find more considerations on exercising options prior to expiration in the IBKR Knowledge Base.