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Options 101
Automatic Exercise: What Happens If You Forget to Close an ITM Option
You don't have to choose to exercise for it to happen. Leave an in-the-money option open at expiration and the system does it for you — with real consequences.
NoVo Options Trading · 2026
The Options Clearing Corporation has a standing rule called “exercise by exception”: at expiration, any option that is $0.01 or more in-the-money is automatically exercised, whether or not you intended it. Forgetting to close a winning 0DTE option doesn't make it vanish — it makes it settle.
What that does to a long call
Say you're long a SPY 741 call and SPY closes at 741.60. It's ITM, so it auto-exercises: you buy 100 shares at $741, roughly $74,100 of stock, delivered into your account. If you were trading a $150 premium, you did not plan to suddenly own $74k of SPY. A long put works in reverse — you'd sell 100 shares you may not have, creating a short position.
In-the-money at the bell doesn't mean “cashed out.” It means “converted into stock” — and the bill lands whether you were watching or not.
How to avoid the surprise
The clean fix is to sell to close before expiration. Closing the option realizes your gain in cash and leaves you with no shares, no exercise, no settlement. If you genuinely can't cover the resulting position, see what your broker does when an option expires ITM and you don't have the cash — it's not pretty. And remember you can never be assigned on a long option; auto-exercise, not assignment, is the thing to manage. With NoVo you close an ITM same-day position in one click before the bell, so an auto-exercise never happens by accident — the exit is effortless, but the call is yours to make.
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NoVo is a software tool for market analysis and for executing trades you initiate, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.