Normally, if an option is out of the money (OTM), exercising it would only lead to a loss. So why on earth would anyone still do it? 🤯
📕Let’s peek into The Options Handbook for this surprising little nugget of knowledge…(Join the events at the end to win rewards!)🎁
▶ The Usual Case: OTM Options Expire Worthless 💲
If your option expires out of the money. For instance, a call with a strike above the stock price or a put with a strike below it, it usually isn't worth exercising.
In most instances, these options expire worthless and are removed from your account the following day.
▶ But Why Exercise An OTM Option On Purpose? 😦
1. Strategic Reasons
In rare situations, investors may still choose to exercise slightly out-of-the-money options.
For instance, if someone wants to buy a large amount of Pear Inc. shares, doing so directly in the market might increase the price.
In that case, exercising a just-barely-out-of-the-money call could result in a lower average purchase price.
2. Last-day, after-hours trading
There's also the post-close window to consider.
In U.S. markets, 0DTE option holders can still request to exercise for up to 90 minutes after the close, if there's a meaningful price move in after-hours trading.
🎉[Mini Events]🎉
How to Join
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Flip to pages 12–14 of The Options Handbook and find a knowledge point about OTM options. Snap a photo and drop it in the comments!
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Don’t have the handbook? No worries! Just share your own thoughts about OTM options in the comments and you’re in!
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Example: “OTM options look cheap, but most of them expire worthless, feels like buying lottery tickets.” (With your photo 📸)
Prizes
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🎁Participation Reward: 10 Tiger Coins for every valid comment.
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📓 Scholar Award: Participants who leave insightful comments will receive a free copy of The Options Handbook!
Event Period
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📅 Sep 5, 2025 → Sep 12, 2025
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Winners announced within 10 trading days after the event.
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