FAQ

Options Expiration policy

Expiring long and short option positions may be closed by Eddid as early as 2:00PM EST on the last trading day prior to expiration if you do not have the funds or buying power to buy or short the underlying stock or ETF. Short option may be closed out by us even if it is out-of-the-money as you may still get assigned. We may close your positions without prior notice.

All expiring options that are at least $0.01 in-the-money (ITM) will be eligible for automatic exercises at expiration. However, we may or may not exercise your option automatically. We may need to contact you for further instructions. If we are unable to reach you, we may not be able to proceed with the exercise. In some instances, there may not be enough equity in the account to make full settlement on the terms of the option.

What do I need to do on the expiration day if my expiring options are in-the-money?

For long option positions, automatic exercise will occur for all options in-the-money by $0.01 or more. For short option positions, you have no control over assignment. The only way to avoid assignment is to close the position before the expiration of that contract.

It is very important if you have positions that are in-the-money that you keep a close eye on these positions and understand what your choices are for these options on Expiration Day.

You can:

• proactively close the option position. In order to avoid a possible margin call for an exercised or assigned position that would exceed your buying power after expiration, you should take market action by 2:00PM EST to close out that position on the expiration day.
• decide to keep the position open if you have adequate buying power available to take possession of the resultant long or short underlying position.
• submit a Do Not Exercise (DNE) instruction on any of your in-the-money option.

What if I don’t have enough buying power to cover the resultant stock position of an
expiring in-the-money option?

On the expiration day, we closely monitor all expiring option positions. Usually we will allow our clients to take action in their own accounts by 2:00PM EST on the expiration day. If you do not manage the expiration risk in your account prior to 2:00PM EST, We reserve the right to buy, sell, or otherwise close positions to manage the risk in your account.

We may:

• close out the position on your behalf
• enter a Do Not Exercise instruction.
• initiate closing stock trades in the after-hours market to cover any resultant position.

Can I trade same-day-expiring options?

Opening positions in same-day-expiring options will not be accepted. Any unexecuted good-till-cancel opening position same-day-expiring options orders will be cancelled by our Trade Desk at market open on the expiration day.

How do I exercise my long option contract?

If your long option contract expires in-the-money by at least $0.01 (based on the closing price of underlying stock or ETF at expiration), Eddid USA will automatically exercise it for you on the expiration day. If you would like to exercise your long option before the expiration day, you can:
send an email to help@eddidusa.com with the following details before 3:15PM EST
OR
submit a ticket via Eddid Trader Mobile App or Eddid Trader Pro - Help Center with the following details before 3:15PM EST

• Your full name
• Your Eddid USA account number
• Number of contracts you would like to exercise
• The underlying symbol, expiration, and strike price

Customers that exercise a long option contract will pay the full aggregate exercise price provided for by the option contract. The cut-off time for submitting exercise requests is 3:15pm for the days prior to the expiration day. Any requests submitted afterwards are processed on a best-effort basis. The exercise request is processed overnight, and your position and balances will be updated on the next business day.

How do I request an exercise-by-exception?

If you have a long option contract that expires out-of-the-money (OTM) and want to exercise it, you may submit an Exercise By Exception request by 4:15PM EST on the expiration day. You can:
send an email to help@eddidusa.com with the following details
OR
submit a ticket via Eddid Trader Mobile App or Eddid Trader Pro - Help Center with the following details

• Your full name
• Your Eddid USA account number
• Number of contracts you would like to exercise-by-exception
• The underlying symbol, expiration, and strike price

Customers that exercise a long option contract will pay the full aggregate exercise price provided for by the option contract. The cut-off time for submitting exercise-by-exception requests is 4:15pm on the expiration day. Any requests submitted afterwards are processed on a best-effort basis. The exercise request is processed overnight, and your position and balances will be updated on the next business day.

Assignment of short option contract

When you are assigned, you have the obligation to fulfill the terms of the contract. When you sell to open an option contract (short option), you can typically get assigned at any time prior to expiration, even if the short option is out-of-the-money. The only way to avoid assignment is to close the position before the expiration of the contract.

Eddid USA allocates the assignment of exercise notices among short positions according to an automated procedure. This procedure randomly selects from among all short option positions (including positions established on the date of assignment) those contracts that are subject to exercise.

All American-style short option positions are liable for assignment at any time. The assignment process may result in multiple partial assignment and/or multiple transactions to fulfill a single assignment, and a separate charge will apply to each partial assignment or transaction needed to complete an assignment.

Things to note about options exercise and assignment

Eddid reserves the right to prohibit the exercise of stock options and/or close short options if the exercise/assignment would place the account in margin deficit. Accounts with insufficient funds to exercise may post substantial risk should an adverse price change in the underlying occur upon delivery.
To protect against these scenarios as expiration nears, Eddid reserves the right to either:

• liquidate options positions prior to expiration.
• allow the options to lapse, and/or
• allow options to be exercised and liquidate positions necessary to resolve a post-expiration margin deficit.

While Eddid reserves the right to take the above actions, Eddid is under no obligation to manage such risks. Account holders are solely responsible for managing the exercise/assignment risks associated with the positions in their accounts.

Note that Eddid generally initiates expiration related liquidations 2 hours prior to the close, but reserves the right to begin this process sooner or later should conditions warrant. If Eddid determines the exposure is excessive, we may liquidate positions in the account to resolve the projected margin deficiency. In addition, the account may be restricted from opening new positions to prevent an increase in exposure.

All exercises & assignments are processed overnight. For assignment, there is no definitive way to know if you will be assigned or how many contracts will be assigned for the short option position in your account until the next morning after the counterparty’s exercise request is processed. For spread, the long leg of your spread will not be automatically exercised if you were assigned early. The long option contract may only get exercised automatically when it expires in the money.

There is a $15 charge for exercises and assignments.

What is Dividend Risk?

If your account has any short call options (covered call or call spread position), there is a risk that you’ll get assigned on your short call options the night before the ex-dividend date.

When this happens to the covered call position, the shares you have as collateral will be called away and you will not be entitled to the dividend payment.

When this happens to the call spread position, your account will have a short stock position on the ex-dividend date, and you will actually be responsible for paying that dividend on the payable date.

You can avoid this by closing your option position before the market closes at 4:00PM EST on the day before the ex-dividend date.

On the trading day before the ex-dividend date, we will check if your account has enough buying power to cover the dividend that you may probably have to pay to the other party when the short leg of your spread position may potentially get assigned. If your account does not have enough buying power to cover the dividend payment, we reserve the right to close out your spread position before the market closes at 4:00PM EST on the day before the ex-dividend date in order to help reduce the risk in your account.