“Oh no! It’s 4:01 pm, Friday afternoon… My Options expired in the money, and I don’t have enough money to take hold of the Stock!!”
This is actually not that big of a deal, believe it or not. In most cases, your Options (whether you bought them or sold them) will be exercised. However, what exactly is the process of exercise and assignment if you don’t have enough money to cover the cost of actual stock?
In The Event You’re Assigned On Your Options
Your broker will mostly likely take hold of the stock on your behalf. Then come Monday morning, your broker will close out of your position at the market open. You will then be liable to pay the cost of commissions and fees, as it’s still a trade that they are making on your behalf.
If the stock opened and moved against you, then you will liable for the difference in price. However, if the stock opens and moves in your favor, in most cases you will make the difference.
This is what happens in most cases. Always be sure to consult with your broker on their specific policies.
Remember, your brokerage firm is made up of people just like you and me. Most brokers are easy to talk to and are willing to help with any questions you have as their client.
An Easy Way To Avoid This Awkward Situation
Just close out of your position prior to expiration!
I don’t mean to sound condescending, but it’s that simple. If you have doubts about your position expiring out of the money, just pay the commission and close out of the position.
Anyway, I hope this eased the worry for some of you who have been worriedly searching on Google, wondering whether or not you’re “ruined”.
Be sure to drop us a comment if you liked this post, or would like further clarification.
Thanks for reading, and have a great day!