Continue reading...Tomorrow, the 18th April 2008, is the 3rd Friday of the month, commonly referred to as expiration Friday. Coincidentally, this year it almost coincides with the first day of the Jewish holiday of Passover. I therefore find it appropriate to ask "Why is this day different than other days?" (If you don’t get the joke, and care to, send me an email.)
The truth is that technically the expiration is on the Saturday following the third Friday, but you can’t trade the options after the close on Friday. Also, if you want to exercise an option that is in-the-money (ITM) by less than a nickel, or not exercise an option that is ITM by a nickel or more, you must notify your broker by 5:30 pm (EST) on Friday. Some brokers require this notification before that time, some as early as 3:30, so be careful. Another example of why it is important to know the rules of your particular broker.
Also, be sure to remember that as I pointed out in my article of February 21, 2008, "Another Pricing Method"...
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