How can I excercise a put or call option?

Question

For example, I want to buy a call less than a month before it expires. The stock goes up beyond the strike price on the day of the expiration. I appear to have 2 choices, excercise it for the stock or sell the option. What should I do? How do I notify my online broker that I want to buy the stock?

Answer 1

It is automatic if you havent sold the call. Even if you dont have enough money in your account to buy the underlying of the stock . You get assigned the stocks and they are automatically sold at the market openning the next business day, the bank will take the amount borrowed plus interests and you will get the profits made. If you have a cash account you can only buy options if you hold enough cash to buy the underlying.
Moreover, you need to take into account assigment fees. Discount brokers have really high fees which make more sense to simply sell the options. Meanwhile, for some full service brokers it is cheaper to pay the assignment fees than pay full comission.

Answer 2

Hello - If you want to exercise on the day of expiration it may actually happen automatically. The OCC (Options Clearing Corp) has a normal auto exercise policy if the underlying stock is 0.25 in the money past the strike price.

However you may want to double check with your broker to see if they have a different threshold.

http://www.investopedia.com/terms/a/automaticexercise.asp

Technically you have

Answer 3

sell the call.

or

call your "online broker" and ask. There are buttons to push to buy the call but no such obvious way to buy the stock. You might even try (shudder) a real broker.