Every option contract has an expiration date, and contracts expire at market close (4 PM ET) that day. You can let your contract exercise automatically at expiration, or exercise it early.
Automatic exercise at expiration
At the time of expiration, Coinbase checks two things:
Whether your contract is in the money or out of the money.
In the money: The stock price is at least $0.01 above your call's strike price, or at least $0.01 below your put's strike price.
Out of the money: It doesn't meet that threshold.
Whether your account can support exercise (meaning enough buying power to cover a long call, or enough shares of the underlying stock to deliver for a long put).
If your contract is in the money and your account can support exercise, it’s exercised automatically (even if the gain doesn't cover your premium, resulting in a net loss).
If your account is in the money, but your account can’t support exercise, Coinbase attempts to sell your position on your behalf, so you don't end up with a negative balance or a short stock position.
If your contract is out of the money, it expires with no value and no shares change hands. Coinbase may also close your position before expiration under certain risk conditions, regardless of whether the contract is in or out of the money.
Exercise a contract early
Exercising a contract early forfeits any value tied to the time remaining until expiration (known as time value). You can only exercise between 4:00 PM and 5:20 PM ET. To request that a contract not be exercised, contact Coinbase support and we’ll make a good-faith effort to fulfill the request, but can't guarantee it.
To exercise a contract early:
From your options position, select Exercise.
Review the exercise explainer and select Continue.
Review any applicable warnings, then select Continue.
Confirm the number of contracts, review the total cost or proceeds, then select Review.
Submit your exercise request.
Processing timelines
Exercise and assignment are processed overnight, so it may take some time before your resulting position appears.
You'll receive an email when an exercise is processed, whether automatically at expiration or early. View the details in your transaction history.
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Disclosures
All securities and investments are offered by Coinbase Capital Markets Corp, member FINRA/SIPC. Securities services offered by Coinbase Capital Markets Corp are separate from digital asset services provided by Coinbase Inc., and any affiliates. SIPC does not apply to digital assets or cash held in your Coinbase Inc. or affiliate account. Additional information about your broker, Coinbase Capital Markets Corp, can be found on FINRA’s BrokerCheck (https://brokercheck.finra.org). Execution, clearing and custody of all securities are provided by Apex Clearing Corporation.
Securities and stock options are offered by Coinbase Capital Markets Corp, member FINRA/SIPC. Options trading privileges are subject to application and approval. Options trading involves significant risk and is not appropriate for all investors. For additional margin risks and disclosures, please visit Characteristics and Risks of Standardized Options.
For UK customers, stock trading is offered by CB Payments Ltd (CBPL), which is authorized and regulated by the Financial Conduct Authority (FRN: 1045733). CBPL is authorized to arrange access to Coinbase Capital Markets Corp and Apex Clearing Corporation for execution, clearing, and custody.
Futures products and services are offered in the U.S. by Coinbase Financial Markets, a member of NFA and is subject to NFA’s regulatory oversight and examinations. Access to the referenced financial products requires user eligibility, and may not be available in all jurisdictions. The risk of transacting in futures can be substantial and may not be suitable for everyone. Not investment advice or a recommendation to trade a particular contract or to employ a particular strategy.
Outside the U.S. (excluding India and Australia)
Outside U.S., derivatives are available only to eligible users in select jurisdictions and are offered by Coinbase Bermuda Ltd., a Class F entity licensed by the Bermuda Monetary Authority. All trading and investment strategies involve risk, including loss of capital, and may not be suitable for all. Leverage in derivatives trading can work for you or against you.
India
Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
Coinbase India Private Limited is registered with FIU-IND to provide virtual digital asset services.
Australia
In Australia, derivatives trading is offered by Coinbase Australia Pty Ltd ACN 654 922 442 ("Coinbase Australia"). Any advice provided is general in nature and has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice having regard to your own circumstances. Derivatives Trading is high risk and you may lose your entire balance. Before making any decisions about whether to use a product, you should read the applicable Product Disclosure Statement, Financial Services Guide and Target Market Determination.
Coinbase Australia is licensed and regulated by the Australian Securities and Investments Commission ("ASIC"), AFSL No. 569752. Coinbase is also registered and enrolled with the Australian Transaction Reports and Analysis Centre ("AUSTRAC") as a virtual asset service provider and a remittance service provider.
This article is for informational purposes only and does not constitute the provision of investment advice. The customer assumes full responsibility for its trading activity and should consult its advisors for its specific situation. This material is not (i) an offer, or solicitation of an offer, to invest in, or to buy or sell, any interests or shares, or to participate in any investment or trading strategy, (ii) intended to provide accounting, legal, or tax advice, or investment recommendations. The information is believed to be current as of the date indicated and may not be updated or otherwise revised to reflect information that subsequently became available or a change in circumstances after the date of publication. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. 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. Recipients should consult their advisors before making any investment decision.
"Funds" in this article is a generic term and may refer to exchange traded funds (ETFs) and/or mutual funds. Securities products are subject to availability and may change at CCM's discretion. See the most up-to-date information on CCM's product offerings.