If the premium is $0.01 or above (in the money) on the last day of trading, and there is sufficient account equity, generally the option contract will be automatically exercised. If the premium is below $0.01 (out of the money), generally the option will expire (out of the money options short positions could potentially still get assigned).
Firstrade reserves the right to close an option position that may be subject to exercise or assignment, depending upon account equity, buying power, and market conditions.
Disclosures
Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Firstrade does not guarantee favorable investment outcomes and 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. To learn more about the risks associated with options, please read the Characteristics and Risks of Standardized Options before you begin trading options. Please also be aware of the risks listed in the following documents: Day Trading Risk Disclosure Statement. Examples contained in this article are for illustrative purposes only. Supporting documentation for any claims, if applicable, will be provided upon request.