Expiration, Exercise, and Assignment

Unlike a stock, each option contract has a set expiration date. The expiration date significantly impacts the value of the option contract because it limits the time you can buy, sell, or exercise the option contract. Once an option contract expires, it will stop trading and either be exercised or expire worthless.

There are a few important things to keep in mind as the expiration date of your option contract nears:

• We’ll attempt to exercise any option you own that is $0.01 or more in the money, as long as your brokerage account has the required buying power (in the case of a call option) or the necessary underlying shares to sell (in the case of a put option). Keep in mind that managing your options positions, including taking proactive steps to mitigate risk, is ultimately your responsibility.
• If you don’t have enough buying power or underlying shares to exercise your option, we may attempt to sell the contract in the market for you within the last hour before the market closes on the options' expiration date.
• Robinhood’s risk checks are designed to close positions which accounts cannot support and take into consideration the value of a position, the implied risk, and the customer’s current balance, among other things.

If your option is in the money at the close, Robinhood will attempt to exercise it for you at expiration unless:

• You don’t have sufficient buying power.
• The exercise would result in a short stock position.
• You have asked Robinhood to submit a Do-Not-Exercise request on your behalf.
• The cut-off time for submitting a Do-Not-Exercise request is 5 PM ET.

If you have a long call about to expire:

• If the contract is in the money (or at risk of being in the money), we’ll review your account to see if you have enough buying power to purchase the underlying shares.
• If you don’t have enough buying power to purchase the underlying shares, we may attempt to sell the option. For example, if you have 10 contracts, but only enough buying power to purchase 500 shares, we may attempt to sell 5 contracts and allow 5 contracts to be exercised for a total of 500 shares. To avoid this, you can close the position or roll it to a later date prior to the last hour of trading (before 3:00PM ET on normal trading days). Keep in mind that options rolling involves simultaneously closing a position (realizing any gains or losses) and opening a new one. Also, options rolling is only available in margin accounts.

If you have a long put about to expire:

• If the contract is in the money (or at risk of being in the money), we’ll review your account to see if you have enough of the underlying shares to sell.
• If you don’t have enough of the underlying shares, we may attempt to sell the option. For example, if you have 10 contracts and own 500 shares, we will attempt to sell 5 contracts and allow the remaining 5 contracts to be exercised, which would result in 500 shares sold from your brokerage account. To avoid this, you can close the position or roll it to a later date prior to the last hour of trading (before 3:00PM ET on normal trading days). Keep in mind that options rolling involves simultaneously closing a position (realizing any gains or losses) and opening a new one. Also, options rolling is only available in margin accounts.

If you have a spread about to expire:

• If both legs are in the money (and neither leg is at risk of being out of the money at expiration). The short leg may be assigned, and the long leg may be exercised to offset the assignment.
• If the spread is partially in the money or close to being partially in the money (i.e. only one leg is in the money or at risk of being in the money), we may attempt to close the entire spread (including the leg that is out of the money). To avoid this, you can close the position prior to the last hour of trading (before 3:00PM ET on normal trading days).
• If both legs are out of the money (and they aren’t at risk of being in the money at expiration), we typically won’t take action and both options should expire worthless.

Once your contract expires, we’ll remove it from your home screen. You can view your expired contracts in your account history.

If your option is in the money, Robinhood will typically exercise it for you at expiration automatically.

You can also exercise your options contract early in the app:

1. Navigate to the options position detail screen
2. Select Exercise

You’ll then be guided through steps to exercise your contract.

Once you exercise an option, you’ll see a card displayed on your home screen that confirms your option was exercised and that the associated shares are pending. You’ll also receive an email and push notification before the next trading day confirming that your option was exercised or assigned (after we receive confirmation from the OCC).

If your option is out-of-the-money, Robinhood will take no action and the contract typically will expire. If you’d like to submit a Do Not Exercise request, you will need to send an email to our Options Support Team.

The shares you have as collateral should be sold to settle the assignment. No additional action should be necessary.

The buying power you have as collateral will be used to purchase shares and settle the assignment. No additional action should be necessary.

You have the obligation to sell shares of the underlying security at the strike price. In this case, the long leg (the call option you bought) should provide the collateral needed to cover the short leg.

You can exercise the long leg of your spread, purchasing the shares you need to settle the assignment.

Example: You enter a XYZ call spread, so you buy one call contract of XYZ (the long leg) and sell one call contract of XYZ (the short leg).

You provide the shares necessary to settle the contract when you’re assigned, so your brokerage account is now short 100 shares of XYZ. To cover the short position in your account, you could exercise the XYZ call contract you bought to receive 100 shares of XYZ. Alternatively, you could also buy back the 100 short shares from the market followed by selling the long call in the open market to capture any time/extrinsic value remaining in the option.

You could sell the long leg of your spread, then separately purchase the shares you need to cover the assignment.

Example: You enter a XYZ call spread, so you buy one call contract of XYZ (the long leg) and sell one call contract of XYZ (the short leg).

When you’re assigned, you sell the shares necessary to settle the assignment and your brokerage account is now short 100 shares of XYZ. Because your long option is out of the money, exercising it would result in purchasing the underlying security at a price higher than what is currently offered in the marketplace. Instead, you could sell the call contract you own, and then separately buy 100 shares of XYZ to settle the short call assignment.

If you’re assigned on the short leg (the put contract you sold) of your spread, you have the obligation to buy shares of the underlying security at the strike price.

In this case, the long leg (the put contract you bought) should provide the collateral needed to cover the short leg. When you exercise the long leg of your spread, you can sell shares aiming to recover the funds you used to settle the short put assignment.

Example: You enter a XYZ put spread, so you buy one put contract of XYZ (the long leg) and sell one put contract of XYZ (the short leg).

When you’re assigned, you have to buy 100 shares of XYZ at the strike price of the assigned put. To help offset the assignment, you can exercise the long XYZ put contract you own to sell the 100 shares of XYZ you just purchased from the short assignment. Alternatively, you could also sell both the shares and the long put in the open market to capture any time/extrinsic value remaining in the long put.

You can sell the long leg of your spread, then separately sell the shares you need to cover the assignment.

Example: You enter an XYZ put spread, so you buy one put contract of XYZ (the long leg) and sell one put contract of XYZ (the short leg).

When your short leg is assigned, you buy 100 shares of XYZ, which may put your brokerage account in a deficit of funds. You can’t exercise the long leg to cover the deficit in your account since it’s out of the money. Instead, you can sell the put contract you own, then separately sell the 100 shares of XYZ you just received from the assignment to help cover the deficit in your account. Alternatively, you can continue to hold the long stock position if your account can support the purchase of the 100 shares.

Early assignment may result in decreased buying power. This is because the positions you hold are used to calculate your buying power, and at the time you’re assigned you may not have the shares (for call spreads) or buying power (for put spreads) needed to cover the deficit in your account. If you have an account deficit, you can’t open new positions until the deficit is resolved.

Early assignment may also result in an account deficit if it causes you to use more buying power than you have available. When you have an account deficit, there are a few potential actions that you can take, including exercising your long contract or buying/selling shares. If you have an account deficit and choose to exercise your long contract to increase your buying power, you will not be able to open new positions while your exercise is pending. But you should be able to open new positions once your exercise has been processed if exercising your long contract is sufficient to cover your account deficit.

Early assignment may also result in margin call (assuming you have margin investing enabled on your brokerage account) if it causes your account value to fall below your margin maintenance requirement. When you have a margin call, there are a few potential actions that you can take: exercising your long contract, buying/selling shares by placing orders, or depositing enough funds to cover the margin call. If you have a margin call and choose to exercise your long contract to decrease your margin deficiency, your margin call may persist while your exercise is pending or, further, if the exercise was not sufficient enough to cover your margin deficit. If exercising your long contract is sufficient to cover your margin deficiency, any margin calls should be satisfied once your exercise is processed.

Keep in mind that we can’t process an early assignment before the end of the trading day and, so we can’t exercise the long leg until the next trading day (at the earliest). That’s because the Options Clearing Corporation (OCC) doesn’t notify us of your assignment until after the market closes (when they process assignments). While funds and shares that result from exercises are made available immediately during market hours, positions exercised after market hours are queued and credited to your account the next trading day.

A few things can happen if your option is exercised early, depending on the time of day.

If the early exercise occurs between 9 AM ET and 4 PM ET, the associated shares should appear in your account immediately; you shouldn’t see any pending exercise in your account.

If the early exercise happens after 4 PM ET, it will be queued for the next trading day, and the associated shares will remain pending until the exercise has cleared.

Once your contract has been exercised or assigned, we’ll hold the associated shares or cash collateral until we receive confirmation from the OCC that all aspects of the exercise or assignment have cleared. This process typically takes 1 business day. Once completed, the pending state of the exercise or assignment will be removed and your account will be updated accordingly.

1. Select the Account icon in the bottom-right corner of your screen
2. Select History
3. Choose the option you’re looking for (e.g. XYZ $1,200 Call 10/21 Exercise)

1. Select the Account icon in the bottom-right corner of your screen
2. Select the Menu icon in the upper-right corner of your screen
3. Select Statements and History
4. Choose the option you’re looking for (e.g. XYZ $1,200 Call 10/21 Exercise)

1. Select Account in the upper-right corner of your screen
2. Select History
3. Scroll to find the option you’re looking for (e.g. XYZ $1,200 call 10/21 Exercise)