Expiration risk

Expiration and assignment risk before you hold

Near expiration, small stock moves can change moneyness, assignment exposure, and exercise consequences. Short options and spreads deserve special attention.

Before allowing expiration

• Confirm whether the option is in, at, or near the money.
• Know whether assignment could create shares, short shares, cash obligations, or concentration.
• Check broker cutoffs and instructions.
• Consider after-hours movement and dividend risk where relevant.

Allowing expiration may be appropriate only when the operational and account consequences are understood and acceptable.

Primary reading: FINRA options overview · FINRA assignment guide · OIC options basics · OIC exercising options · OCC options disclosure document · SEC Investor Bulletin on options