FX Options
For FX Options, expiry is an automatic process, meaning you do not have to call in to manage the exercise or expiry. If the option is in the-money it will automatically settle in the pre-defined exercise method (described in the next point), or the option will automatically expire (cease to exist) at 10 am Eastern Standard Time (New York cut) on the expiry date.
Please refer to FX Options trading conditions for additional information.
Listed options
Stock options
Typically, stock options and contract options are settled physically, while index options are settled by cash. Holders of a long position in American Style options can exercise the option any time prior to expiry, except on the last trading day.
When the exercise request is entered, the option position is closed at price 0 and a position in the underlying instrument is created at the strike price. This happens instantly.
Clients should always consider closing the option position in the market and acquiring the underlying instrument separately.
Currency options on CME are not allowed to be exercised out of the money, hence these requests will be cancelled once encountered.
Around option expiry, you may notice margin utilization spike. More information please check here.
At expiry - meaning
- If the Listed option is In-The-Money AND you have sufficient cash to buy the underlying stock, you will be assigned the Listed option to buy at the strike price.
- If the Listed option is In-The-Money AND you do NOT have sufficient Cash to buy the underlying stock, Saxo will close out your Listed option position before expiry.
If you want the underlying stocks, ensure there is enough cash in your account at least two hours before expiry.
On rare occasions when the cash in your account changes rapidly (or under other special conditions), our system may assign stocks to your account even if there is insufficient cash, resulting in a cash deficit. In such cases, we will send you a fund-in request notification. If the deficit is not covered, we will proceed to sell the shares:
HK Shares: The deadline is 1 hour before the HK market closes.
EU/US Shares: The deadline is 45 minutes after the EU/US market has opened.
Contract options
Saxo Markets offers two types of Contract Options as defined by the exchange:
- American style Options can be exercised online at any time before the expiry apart from the last trading day.
- European style Options can only be auto-exercised at expiry.
When in-the-money, an American style Contract Options position can be exercised into a specific Futures contract position, which is visible on the Account Summary until expiration. Once the Contract Option expires, the position stays visible on the Account Summary until the settlement day (instrument-specific). A European style Option, when in-the-money, is only exercised at expiry and is cash settled.
It is not possible to exercise physically settled Listed Options that are more than 5% out-of-the-money.
The settlement style and expiry details are available in the trade ticket and trading conditions.
For additional information, please refer to the Listed options trading conditions.