Options Exercise

To exercise an option is to implement the right under which the holder of an option is entitled to buy (Call option) or sell (Put option) the underlying security. Options are exercised through the IB Trader Workstation's Option Exercise window (accessible from the TWS View menu). For detailed instructions on exercising an option using the IB Trader Workstation, refer to the TWS User's Guide.

Option Exercise Requests (whether received through an IB TWS Option Exercise window or by e-mail(1)) may be submitted as follows:

For Equity Option Contracts Traded upon: Early Exercise
 IB must receive an Exercise Request by:
North America US Options Exchanges N/A 16:30 EST
Montreal Exchange N/A 16:30 EST
Europe Euronext 19:15 CET 19:45 CET
Eurex (German and Swiss) 19:00 CET 21:00 CET
IDEM 18:30 CET 08:15 CET Stock Options
10:00 CET Index Options
LIFFE 17:20 GB-Eire 18:30 GB-Eire
18:00 GB-Eire (ESX only)
MEFF 18:00 CET 18:50 CET
Sweden 17:20 GB-Eire 18:20 GB-Eire
Asia Pacific Australia N/A 17:15 Australia/NSW
Notes:
  1. In the event that an option exercise cannot be submitted via the TWS, an option exercise request with all pertinent details (including option symbol, account number and exact quantity), should be created in a ticket via the Account Management window. In the Account Management window, click on “Inquiry/Problem Ticket”. The ticket should include the words “Option Exercise Request” in the subject line. Please provide a contact number and clearly state in your ticket why the TWS Option Exercise window was not available for use.
Expiration Friday Option Exercise Instructions

Use the TWS Option Exercise window to either: (i) exercise an option prior to expiration, or (ii) deliver "contrary intentions" to the clearinghouse for the options held; e.g., The Options Clearing Corporation (“OCC”) for options traded on U.S. options exchanges. You must also use the TWS Option Exercise window to instruct the clearinghouse to exercise an option contrary to the clearinghouse’s accepted policy on an options Expiration day (e.g., Expiration Friday for US options). If you do not use the TWS Option Exercise window to manually manipulate options, the clearinghouse will handle the exercise automatically in the manner described below:

OCC (USA)
FOR EQUITY OPTIONS TRADED ON US EXCHANGES AND CLEARED THROUGH OPTIONS CLEARING CORPORATION (OCC):
  • Stock options expiring in the current month that are $0.05 or more in the money will be automatically exercised by the OCC without the need for any explicit instructions from IB.

  • Index options expiring in the current month that are more than $.01 in the money will be automatically exercised by the OCC without the need for any explicit instructions from IB.

The OCC must receive "contrary intentions" through the TWS Option Exercise window if you want to:

  • exercise a stock option that is in the money by LESS than $0.05.

  • exercise a stock option or index option that is out of the money.


CDCC (Canada)
FOR EQUITY OPTIONS TRADED ON CANADIAN EXCHANGES AND CLEARED THROUGH CANADIAN DERIVATIVES CLEARING CORPORATION (CDCC):
  • Stock options expiring in the current month that are 0.05 CAD or more in the money will be automatically exercised by the CDCC without the need for any explicit instructions from IB.

  • Index options expiring in the current month that are more than 0.01 CAD in the money will be automatically exercised by the CDCC without the need for any explicit instructions from IB.

The CDCC must receive "contrary intentions" through the TWS Option Exercise window if you want to:

  • exercise a stock option that is in the money by LESS than 0.05 CAD.

  • exercise a stock option or index option that is out of the money.


ECC (Germany, Switzerland)
FOR EQUITY OPTIONS TRADED ON EUREX AND CLEARED THROUGH EUREX CLEARING AG (ECC):
  • Stock options expiring in the current month that are more than 10 basis points in the money will be automatically exercised by the ECC without the need for any explicit instructions from IB.

  • Index options expiring in the current month that are more than 10 basis points in the money will be automatically exercised by the ECC without the need for any explicit instructions from IB.

The ECC must receive "contrary intentions" through the TWS Option Exercise window if you want to:

  • exercise a stock option that is in the money by 10 basis points OR LESS.

  • exercise a stock option or index option that is out of the money.


LCH (UK)
FOR EQUITY OPTIONS TRADED ON LIFFE AND CLEARED THROUGH LONDON CLEARING HOUSE (LCH):
  • Stock options expiring in the current month that are more than 1 pence in the money will be automatically exercised by the LCH without the need for any explicit instructions from IB.

  • Index options expiring in the current month that are more than 1 pence in the money will be automatically exercised by the LCH without the need for any explicit instructions from IB.

The LCH must receive "contrary intentions" through the TWS Option Exercise window if you want to:

  • exercise a stock option that is in the money by 1 pence OR LESS.

  • exercise a stock option or index option that is out of the money.


CNET (Belgium, France, Germany, Netherlands)
FOR EQUITY OPTIONS TRADED ON EURONEXT AND CLEARED THROUGH CLEARNET SA (CNET):
  • € Stock options expiring in the current month that are more than 0.01 in the money will be automatically exercised by CNET without the need for any explicit instructions from IB or IB customers.

  • € Index options expiring in the current month that are more than 0.01 in the money will be automatically exercised by the CNET without the need for any explicit instructions from IB or IB customers.
At this time, there is no support for “contrary intention” decisions, e.g. exercising out of money options, or not exercising in the money options.