Another first for me - expired while in the money

You sold a $10 put expiring on 5/9/2025. The stock closed at $8.98 on that day. That means that the put was in the money. Why would anyone in their right mind not exercise a $10 put when they could buy the stock for $8.98 and sell it to you for $10? Well, I can think of one reason. Since the trade settles on the next trading day, Monday (today), if they knew somehow that the stock would pop to $10.70 on Monday, and that they would be better off NOT selling it to you at $10, and instead selling at $10+ on Monday (right now it is trading at $10.70), they might let it expire worthless and instruct their broker to NOT automatically exercise it.

My broker will automatically exercise any option that is in the money by at least $0.01. In fact, before my options expire, I usually get an email from them to that effect. Oddly enough, since most of my options are “short” (I wrote and sold them), I still get that email from my broker.

So, you gained a little on that option that wasn’t exercised. You got to keep the entire premium and didn’t have to buy stock at $10. But had that option been exercised, you would have bought stock this morning at exactly $10 and could have sold right now at $10.70 for more gain.

Now, how did they know it would pop on Monday? I wonder when the instruction to NOT automatically exercise have to be sent to the broker? Maybe after some news came out that would indicate a pop? But even in afterhours trading on Friday, it never traded much above $9. Very odd.

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