9.3.4 Automatic Exercise of Options/Assignment of Exercise
For Automatic Exercise/Assignment exercise of options, the system will identify all ‘In the Money’ instruments on the Expiry Date and fire automatic exercise (for Long Positions) and Assignment of Exercise (for Short Positions) for the portfolio.
The Instrument and the Series (which is being traded) will be marked as Expired and will be unavailable for further trading.
For your bank’s own portfolios, the system will compute the Exercise Gain and Assignment Loss and post relevant accounting entries for the same.
Note:
For Customer portfolios, for Options with Future Style Premium, the system does the money settlement for the difference between the underlying asset Spot Price and the Option Strike Price. Also, the money settlement for the Deal Premium is calculated.
Parent topic: Automatic Events Executed during End of Day for Options