LedgerX options are European-style, meaning the buyer can only exercise the option at expiration. If sufficient collateral is not on deposit at LedgerX, the exercise instructions will not be accepted. There is no auto-exercise.
- Options expire at 4pm EST on the expiration date. Settlement runs at 5pm EST.
- The option buyer has until 5pm EST on expiration to submit exercise instructions. See How to exercise options on LedgerX
- You can trade (close) out of a position anytime before expiration. See How to close out of an options position.
Call Options at Expiration & Settlement
At time of trade execution:
- The long holder paid a USD premium to the seller for the option.
- The short holder received this USD at time of trade.
- The underlying bitcoin is Position Locked on the short holder's account at time of trade.
At expiration/settlement:
- If the long holder exercises, they pay the USD strike price to buy bitcoin. Bitcoin is transferred to the buyer's LedgerX account at settlement, and USD is transferred to the seller's account at settlement.
- If the long holder does not exercise, the option expires worthless. The underlying bitcoin that is Position Locked on the short holder's account is unlocked at 5pm settlement and made Available for Trading in the short holder's account.
Put Options at Expiration & Settlement
At time of trade execution:
- The long holder paid a USD premium to the seller for the option.
- The short holder received this USD at time of trade.
- The underlying USD strike price is Position Locked on the short holder's account at time of trade.
At expiration/settlement:
- If the long holder exercises, they sell bitcoin at the strike price. USD is transferred to the long put holder's LedgerX account at settlement, and bitcoin is transferred to the short put holder's account at settlement.
- If the long holder does not exercise, the option expires worthless. The underlying USD that is Position Locked on the short holder's account is unlocked at 5pm settlement and made Available for Trading in the short holder's account.
Next read: Options Contract & Listing Details