Important: Options are high-risk products. At expiration you can lose the entire premium paid.
Closing a position before expiration
If you're long (you bought the option): place a sell to close order.
If you're short (you sold the option): place a buy to close order.
If you hold the position to expiration
OTM (out of the money): The option expires worthless. You lose the premium paid. No exercise fee is charged.
ITM (in the money): depends on the Automatic closing on expiration setting in Options settings, which is on by default.
With the setting on: on expiration day we try to close (sell) your bought options that have value, at the market price, which may be lower than what you paid. We try during the last hour of the session. Closing is not the same as exercising: you don't receive or deliver shares.
With the setting off: we don't close them automatically, and you decide whether to close or exercise your contract. If you do nothing, at market close we exercise them only if you have the cash (for a call) or the shares (for a put) needed. If you don't, we try to sell them. If they can't be sold, we may ask for them not to be exercised and they expire unexercised.
Regardless of the setting, during the day we try to close options you can't cover (cash for a call, shares for a put), options that are only slightly in the money, and options that would be exercised without enough balance to cover the exercise fee.
Not guaranteed: Hapi may not be able to close an option (for example, due to lack of liquidity or market conditions).
If you change the setting on the same day your options expire, the change doesn't apply to options expiring that day; it applies from the next expiration.
Manual exercise: if you hold a bought position, you can request to exercise it any business day until 3:30 p.m. ET. When you request it, we reserve the cash (call) or the shares (put), and that option is removed from automatic closing. The exercise fee may apply.
Notifications: on expiration day, at 9:30 a.m. ET, we send you a notification with the options expiring that day. If we close or exercise an option, we also notify you.
Exercise and assignment
Exercise and assignment may incur the current fee published in the app/web.
Assignment can occur at any time before expiration and is outside your control. The "Automatic closing on expiration" setting doesn't apply to sold options.
If you sold a Covered Call or a Cash-Secured Put, the reserved collateral (shares or cash) is used to fulfill the contract in case of assignment. See how options collateral works.
If you have questions, contact our support team. Support does not provide investment, tax or legal advice.
Important — Risks of trading options
Options are not suitable for all investors and involve a high degree of risk. Before trading options you must read the disclosure document "Characteristics and Risks of Standardized Options" (Options Disclosure Document / ODD), available at https://hapi-public-documents.s3.us-east-1.amazonaws.com/occ-options-disclosure-document.pdf. Supporting documentation for any claim is available on request.
Options involve market risk, high volatility, illiquidity, time decay, and expiration risk. If you buy an option, you can lose the entire premium you paid —within a relatively short period— if the option is worthless at expiration. If you sell (write) an option, losses can be substantial and, for uncovered options, theoretically unlimited. Assignment can occur at any time before expiration, without prior notice.
This material is for informational purposes only and is not a recommendation, advice, or a solicitation to buy, sell, or hold any option, security, or strategy. Hapi Securities is self-directed and does not make investment recommendations. Trading options requires prior approval of your account for the applicable trading level.
Options, stocks, and ETFs are offered by Hapi Securities LLC, member of FINRA and SIPC (CRD #311868); custody and clearing via Apex Clearing Corporation. SIPC protects certain securities in the event of the broker-dealer's insolvency; it does not protect against market losses and does not cover crypto. More information at https://www.sipc.org.