Tender of Exercise Notices

What this video covers

• Which clearing member may tender an exercise notice, and why the contract must be carried with that member at the Options Clearing Corporation
• How the three-step expiration process works: the exercise report, affirmative instructions, and deemed tender
• How the one-cent automatic exercise threshold applies to calls and puts, including the relevant closing price and the manual override
• What happens when the clearing corporation cannot obtain a closing price and automatic exercise is suspended
• How a contrary exercise advice (CEA), also called an expiring exercise declaration (EED), can cancel an automatic exercise or trigger an exercise that would not happen automatically
• How electronic and non-electronic cutoff periods work, why a reduced cutoff cannot precede the market close, and how halts affect submissions
• How to calculate an American-style index option net long position using the opening balance, same-day opening purchases, and same-day closing sales, along with the rules for designations, records, and late instructions