What will happen to my spread option positions on the options expiration date?

For calendar option spreads (also known as horizontal option spreads):

If your Short Leg is in-the-money at the market close, you will potentially be assigned and required to buy or sell the underlying shares. If this results in a margin call, you will be required to fully cover the call. Depending on the underlying cause of the margin call you may be able to cover the call by either exercising the long option, liquidating or buying to cover the assigned shares, or depositing funds. Depending on the type of margin call issued, some of the methods of covering the call may not be available.

Redbridge reserves the right to take any action it deems necessary to mitigate risk without notice, including, but not limited to, closing out your short position before the market close, or closing out your margin call. Action taken by Redbridge is on a best-efforts basis and is not guaranteed. Market or limit orders may be placed by Redbridge which could result in orders being filled at less than favorable pricing, or orders not executing at all.

You can avoid potential Short Leg assignments by closing your Short Leg option at any time prior to the market close.

Please note that at any time you are holding short option contracts you may be assigned (not just after the option expires).

Please also note that you may be assigned on a short option contract that is out of the money, although this situation happens infrequently it is still possible to be assigned on an out of the money short option contract as the buyer of the option contract may choose to exercise an out of the money contract.

You are responsible for monitoring your account and are responsible for losses incurred from options activity (including any actions taken by Redbridge).

Options trading entails significant risk and is not appropriate for all investors.

For vertical option spreads:

If your Short Leg is In-The-Money (ITM) at the market close, you will potentially be assigned and required to buy or sell the underlying shares. We highly recommend you close the position when the Long Leg is Out-of-The-Money (OTM). If you do not take action prior to 3 hours before market close on the contract expiration date, Redbridge reserves the right to:

close out spreads that are ITM or Near-The-Money (NTM) at our sole discretion,
exercise the Long Leg to avoid any margin deficiencies,
cover any margin calls without notification, or
take any other action needed to mitigate risk at our sole discretion.

Action taken by Redbridge is on a best-efforts basis and is not guaranteed. Market or limit orders may be placed by Redbridge which could result in orders being filled at less than favorable pricing, or orders not executing at all.

If the Long Leg is ITM and your Short Leg is OTM at the market close, the Long Leg will be auto-exercised if it is ITM by $0.01 or more. If the Long Leg is ITM without sufficient Buying Power, we may submit Do Not Exercise instructions on your behalf without prior notice to you. If you do not take action prior to 3 hours before market close on the contract expiration date, Redbridge may attempt to liquidate the position in the open market at our sole discretion, or take any other action needed to mitigate risk at our sole discretion. Action taken by Redbridge is on a best-efforts basis and is not guaranteed. Market or limit orders may be placed by Redbridge which could result in orders being filled at less than favorable pricing, or orders not executing at all.

You can avoid a potential short assignment outcome by buying to close the short option or closing the spread prior to the market close.

Please note that at any time you are holding short option contracts you may be assigned (not just after the option expires).

Please note that you may be assigned on a short option contract that is out of the money, although this situation happens infrequently it is still possible to be assigned on an out of the money short option contract as the buyer of the option contract may choose to exercise an out of the money contract.

You are responsible for monitoring your account and are responsible for losses incurred from options activity (including actions taken by Redbridge). Options trading entails significant risk and is not appropriate for all investors.