When approaching the expiry of a Contract Options (CO) that has a Stock as the underlying, and the option is In-The-Money (ITM) or reasonably close to be ITM, our risk system will start to calculate the cost of acquiring the underlying stocks, and reserve cash accordingly.
More specifically, 2 hours before expiry, our risk system starts reserving more and more cash, minute-for-minute. This is to ensure you have the cash required to acquire the underlying Stocks at the strike price at the time of expiry. Please note that this cash reserved is in additional to and on top of the margin required for maintaining all margin positions.
The cash the risk system reserves, will be shown as Initial Margin Requirement and Maintenance Margin Requirement - hence you might experience a spike in your Margin Utilization around expiry. Should there be insufficient margin collateral funds on your account, it is prioritized to only close out the stock options that expires on the same date but depending on the circumstances, this could lead to other margin positions also being closed out as well.
At expiry - this means:
- If the Contract Option is In-The-Money AND the you have sufficient cash to buy the underlying stock, you will be assigned on the Contract Option to buy at the strike price.
- If the Contract Option is In-The-Money AND the you do NOT have sufficient Cash to buy the underlying stock, Saxo will close-out your Contract Option position before expiry.
You may refer to the attached Fact Sheet on Stock Option Expiry and the Closeout Report for more information on your specific Contract Option position.
SaxoTraderGO: Navigate to Account > Other > Closeout Report
SaxoTraderPRO: Navigate to ADD MODULE > Other > Closeout Report