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Derivatives

  Derivatives   |   Terms
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  • July 24, 2021
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Automatic Exercise

A clause in an option contract providing that the contract will be exercised automatically by the clearing firm at expiration if it is in the money by a specified amount or for options that are cash-settled.

It is a procedure used by option clearinghouses, on behalf of optionholders, who do not have to issue any specific instructions if their options are expiring in the money by a given amount or are cash-settled upon expiration.


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