How does options settlement work??
In both cases at the actual point in time that the option expires, ITM?s settle to the physical underlying. OTM?s settle out worthless. If the underlying closes .01 or more the option will be ?auto-exercised? unless the clearing house is notified otherwise, and the buyer or holder of a long option will assume possession of the underlying.?
To learn more:
Options Bootcamp Episode 7: Back to Basics
Options Bootcamp 34:?A Very Special Episode
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