FLEX options offer the ability to custom-tailor most contract terms, and to select from an array of actively traded underlying stocks. Contact your brokerage firm or Cboe for eligible classes. FLEX Options are the only exchange-listed equity options that allow users to select option contract terms. FLEX Option terms that can be customized are: Expiration Date The expiration date can be set for up to a maximum of 15 years from trade date, down to a minimum of one day same-day expiration is not permitted for a newly created series.
The expiration date specified must be a business day. Exercise Style American or European style exercise can be specified. However, reporting obligations apply for a position in excess of the standard limit for non-FLEX options in the same class. Also, if the Exchange determines that a higher margin requirement is necessary in light of the risks associated with a FLEX Equity option position in excess of the standard limit for Non-FLEX Equity options of the same class, the Exchange may consider imposing additional margin upon the account maintaining such under-hedged position.
For more details, visit Cboe Rule 24A. Exercise of FLEX Equity Options results in physical delivery of stock or shares of an Exchange Traded Fund on the next business day following tender of exercise notice.
The minimum size for FLEX Equity Options exercises is 25 contracts or the participant's entire remaining position in the series, whichever is less. For stock splits, mergers, spin-offs, etc. Exercise-by-Exception OCC Exercise-by-Exception processing procedures allow clearing member firms to exercise option contracts that are in-the-money by certain threshold amounts at expiration, without submitting individual instructions for each position to OCC, unless the clearing member has instructed OCC to exercise none, or fewer than all, of the option contracts.
Customers should always check with their clearing firm for current exercise thresholds. Please be aware that pricing patterns may differ between European and American style options. Under certain circumstances, it is possible that the spread margin held by a carrying broker could become insufficient to cover the assignment obligation on the short option if the customer is unable to exercise the long European-style option and that option is trading at a discount to its intrinsic value.
This can also occur between two European-style options with different expirations. Therefore, the carrying broker-dealer will most likely require higher margin for such spreads. For questions concerning customer margin treatment or more details concerning the margin required for various trading strategies, please contact Jim Adams in the Cboe Department of Member Firm Regulation at for assistance.
The matters discussed in this section are subject to detailed rules, regulations, and statutory provisions which should be referred to directly for additional detail and are subject to changes that may not be reflected in this material. Account Settings Sign Out.More...