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Brad, I exercised some options last time just to answer for myself those same questions. Wish I could remember the answers. I believe I had to give notice of intent to exercise at least an hour before the close, based on the price at the time. Cost to exercise $50 (vs. cost to sell of $45---and these rates used to be considered a bargain. Time to look at other brokers. ) On Monday, I had until 2 Eastern to decide to keep the stock or not. If I had kept it, I would have had to pay for it by Wed. I didn't keep it as it was around 10 3/4, I think , and I was about $5000 shy of being able to pay for it. Had it jumped up $2, I could have sold out at a profit without ever having to pay for it(which is what I did, minus the profit). However, your account gets restricted for 90 days if you don't put up the money even though you already sold the stock. All this means is that you have to pay up front for the next three months. So, if I called the stock away from someone, they had to make delivery or borrow short shares. I imagine the mechanics of these things are such that most options that aren't worhtless find their way back to the original sellers. All accounts get zeroed out somehow and the players all place their bets on the next month. |
