Options Glossary

Glossary: Automatic Exercise

Last Updated: July 12, 2015


Automatic Exercise

What Does Automatic Exercise Mean in Options Trading?

The exercise of an in-the-money option by the clearing firm (Options Clearing Corporation) as a measure of protection for the holder of the expiring option. It can be compared to an insurance policy for the option holder.
Sometimes an option holder may not be consistently monitoring his options. In this the Options Clearing Corporation will exercise the option and this way the option holder can still benefit from profits.

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