Option expiration is the final date on which an option holder may elect to exercise their long option contracts. Starting at 4:00:01 pm ET on the expiration date, the option holder will not be able to exercise the option position. Options that expire in-the-money by $.01 are subject to automatic exercise.

For example, if you own a call option with a strike of $100 and the underlying stock closes on expiration at $100.01, your call option will be considered in-the-money, and you will be delivered 100 shares of the underlying stock. The automatic exercise will happen on expiration day by 6:00 PM ET. Your account should have sufficient funds or buying power in advance of the exercise happening. If your account does not have sufficient funds you should sell to close the option prior to the end of the trading day on expiration. Alpaca may take action and close the option if your account does not have sufficient buying power to handle the purchase of the underlying stock.

For further details on option trading at Alpaca, please navigate to our documentation.

For further educational information on Options trading, please refer to: https://www.optionseducation.org/

Options trading is not suitable for all investors due to its inherent high risk, which can potentially result in significant losses. Please read Characteristics and Risks of Standardized Options before investing in options.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. There is no guarantee that any investment strategy will achieve its objectives. Please note that diversification does not assure a profit, or protect against loss. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.