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Total Posts: 361
Joined: Aug 2007
Posted: 2019-12-08 15:37
Does anyone have any idea how option assignment functionally works? Does the OCC receive an option tender notice if the broker can't source it? I have been been receiving early exercise this year in SPY options in one of my PA accounts and I have never had people randomly throw away premium at work.


Total Posts: 962
Joined: Jun 2004
Posted: 2019-12-14 16:40
I'd be curious to know this too. As far as I know:
1. OCC performs all E&A (brokers cannot self-clear).
2. Shorts are randomly matched against tendered exercises.
3. All settled T+1.
4. Listed US equity options are nominally american, but functionally bermudan. If you call your broker at noon to exercise a long call, assignment doesn't happen until after eod.
5. Retail customers routinely exercise calls and puts non-optimally, but this is nothing new.
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