If your options position expires out of the money, it will expire worthless and will not be exercised or assigned.
- Long Call: The option expires worthless - you lose the premium paid
- Long Put: The option expires worthless - you lose the premium paid
- Covered Call: The call expires worthless - you keep the 100 shares and the premium received when you sold to open the position.
- Cash-Secured Put: The put expires worthless - you keep the premium received when you sold to open the position and you don’t have to buy any shares at the strike price.
Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Options Disclosure Document. Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.