Exercise cut-off
Definition · Level 3 · Spreads & short options
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The time after the close until which holders can still tell their broker to exercise, or not exercise, an expiring option: about 5:30 pm Eastern time for US equity options under current Options Clearing Corporation (OCC) rules, with earlier broker deadlines.
Example
The stock closes at 50.02; news at 4:30 pm sends it down, and holders can still exercise the 50 puts before the cut-off.
Rules and market figures change: check the current ones before relying on this.
Where Tradecraft teaches it
Level 3 · Spreads & short options, in the lesson “Expiration day: pin risk & the one-leg trap”: Exercise by exception, pin risk, and why a spread that closes between its strikes is dangerous.
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