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Strategy to exercise OTM options after market close on Expiry Day (becomes ITM after hours)
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User asks about mechanics and margin rules for manually exercising OTM NVDA calls that turn ITM after hours on expiration day.
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Say I have 50x of NVDA Call option $200 strike price
market closes on expiry day at $199 = worthless and will not be automatically exercised,
but then price increased to $202 after hours at 4:10pm ET, becomes ITM.
I only have $100,000 left in my balance / purchasing power including margin,
and intend to exercise the option + sell shares immediately.
- Does that mean I can only exercise about 5 options (out of my 50 options) ? Since I will only get assigned the next trading day, should I sell the shares first, or exercise it first (is there a feature to do it simultaneously) ?
- After doing both transactions, would both positions be closed immediately (and I'm left just with the profit), or would both positions still show in my dashboard until next trading day?
- Since exercising call option + selling underlying shares, kind of cancel each other in terms of my purchasing power (does the broker e.g. IBKR see it this way at 4:20pm?), can I rinse and repeat this every minute, 5 options at a time, 10 times, so that I can utilize all my 50 options?
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