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As a holder of an American style option, you can choose to exercise your option at any point up until the expiration date. Typically, options are only exercised when they are in-the-money. If the option is out-of-the-money , exercising would mean either paying more than market price to buy shares or receiving less than market price to sell shares.

As a writer, you can't control or predict whether your option will be exercised. Though, if the option is in-the-money, it's likely the holder will decide to capitalize on the profit and exercise the option. The only way to avoid exercise is by closing out the position before the option expires or the holder chooses to exercise.

All long options are subject to automatic exercise by the Options Clearing Corporation OCC unless you instruct otherwise. The option is exercised automatically if it's in-the-money by a predetermined amount. Other brokerages may set their own auto-exercise procedures. Options involve risk and are not suitable for all investors.

Trading, Investing & Retirement | Scottrade

Detailed information on our policies and the risks associated with options can be found in Scottrade's Options Application and Agreement, Brokerage Account Agreement, and Characteristics and Risks of Standardized Options available at your local Scottrade branch office or from the Options Clearing Corporation at OPTIONS or by visiting www.

All option accounts require prior approval by Scottrade. Market volatility, volume, and system availability may impact account access and trade execution. Supporting documentation for any claims will be supplied upon request. Any specific securities, or types of securities, used as examples are for demonstration purposes only. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security or account.

Such consent is effective at all times when using this site. Brokerage products and services offered by Scottrade, Inc. All investing involves risk. The value of your investment may fluctuate over time, and you may gain or lose money.

In this instance, equity is defined as Total Brokerage Account Value minus Recent Brokerage Deposits on Hold. The performance data quoted represents past performance.

Past performance does not guarantee future results. The research, tools and information provided will not include every security available to the public.

Although the sources of the research tools provided on this website are believed to be reliable, Scottrade makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability or reliability of the information. Information on this website is for informational use only and should not be considered investment advice or recommendation to invest.

Scottrade does not charge setup, inactivity or annual maintenance fees. Applicable transaction fees still apply.

Scottrade does not provide tax advice. The material provided is for informational purposes only.

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Please consult your tax or legal advisor for questions concerning your personal tax or financial situation. Investors should consider the investment objectives, charges, expense, and unique risk profile of an exchange-traded fund ETF before investing.

A prospectus contains this and other information about the fund and may be obtained online or by contacting Scottrade. The prospectus should be read carefully before investing.

Leveraged and inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies. Investors should monitor these holdings, consistent with their strategies, as frequently as daily. Investors should consider the investment objectives, risks, charges and expenses of a mutual fund before investing.

No-transaction-fee NTF funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder or SEC 12b-1 fees.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. It contains information on our lending policies, interest charges, and the risks associated with margin accounts. Consult with your tax advisor for information on how taxes may affect the outcome of these strategies.

Keep in mind, profit will be reduced or loss worsened, as applicable, by the deduction of commissions and fees. Market volatility, volume and system availability may impact account access and trade execution.

Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss, in a down market. Third-party websites, research and tools are from sources deemed reliable. Scottrade does not guarantee accuracy or completeness of the information and makes no assurances with respect to results to be obtained from their use.

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Noncore Investments Determining Your Asset Mix How Many Funds Do You "Need"? How Many Investments Should You Have?

How Much Risk Can You Tolerate? Regulatory Trading Suspensions Trading Halts: Excercising the Option As a holder of an American style option, you can choose to exercise your option at any point up until the expiration date.

Automatic Exercise All long options are subject to automatic exercise by the Options Clearing Corporation OCC unless you instruct otherwise. Examples exclude transaction costs and tax considerations. Call Us At Unauthorized access is prohibited.