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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: peacelover who wrote (35776)	2/22/1998 9:18:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 61433

This is directed at Matt or anyone interested. The automatic in the money option assignment is brokerage house specific. That is to say that the brokerage house may stipulate the amount an option may be in the money before it is automatically assigned at expiration. This is true even if the ex by ex is in the money more that required by the OCC. See the following: The Expiration Process A stock option usually begins trading about eight months before its expiration date. The exception is LEAPS(r) or long-term options, discussed below. However, as a result of the sequential nature of the expiration cycles, some options have a life of only one to two months. A stock option trades on one of three expiration cycles. At any given time, an option can be bought or sold with one of four expiration dates as designated in the expiration cycle tables which can be found in the Appendix. The expiration date is the last day an option exists. For listed stock options, this is the Saturday following the third Friday of the expiration month. Please note that this is the deadline by which brokerage firms must submit exercise notices to OCC; however, the exchanges and brokerage firms have rules and procedures regarding deadlines for an option holder to notify his brokerage firm of his intention to exercise. Please contact your broker for specific deadlines. OCC has developed a procedure known as Exercise By Exception to expedite its processing of exercises of expiring options by certain brokerage firms that are Clearing Members of OCC. Under this procedure, which is sometimes referred to as "ex-by-ex", OCC has established in-the-money thresholds and every contract at or above its in-the-money threshold will be exercised unless OCC's Clearing Member specifically instructs OCC to the contrary. Conversely, a contract under its in-the-money threshold will not be exercised unless OCC's Clearing Member specifically instructs OCC to do so. OCC does have discretion as to which securities are subject to, and may exclude other securities from, the ex-by-ex procedure. You should also note that ex-by-ex is not intended to dictate which customer positions should or should not be exercised and that ex-by-ex does not relieve a holder of his obligation to tender an exercise notice to his firm if the holder desires to exercise his option. Thus, most firms require their customers to notify the firm of the customer's intention to exercise even if an option is in-the-money. You should ask your firm to explain its exercise procedures including any deadline the firm may have for exercise instructions on the last trading day before expiration. Glenn