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Investment/Financial Term - AUTOMATIC EXERCISE

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AUTOMATIC EXERCISE


The Options Clearing Corporation (OCC) uses this procedure to exercise in-the-money options at expiration. Doing so protects the owner of the option from losing the intrinsic value of the option because of the owner's failure to exercise. Unless instructed not to do so by the owner of the option (through the owner's broker), The Options Clearing Corporation will exercise all expiring equity options that are held in customer accounts if they are in-the-money by .05 or more. Think or swim will automatically exercise an option position if it is .05 or greater in-the-money at expiration unless the owner of the option instructs otherwise.