In the case of any stock option associated with a merger in which the underlying security has been converted to 100% cash after December 31, 2007, the OCC will accelerate its expiration.  The new expiration date for such options will be accelerated to the nearest standard equity expiration, unless the cash conversion takes place after the Tuesday within an expiration week, in which case the expiration date for all contracts not already expiring that week will be deferred until the following month’s expiration.

Note that this acceleration does not impact the automatic exercise threshold, through which all options having a strike price that is in-the-money by at least $0.01 will be automatically exercised by OCC.  Nor does it impact the date of the cash settlement attributable to the exercise which remains at T+3.

Also note that this acceleration does not affect options which were converted to cash on or before December 31, 2007 which will remain valid series until their original expiration date has been reached.

Please note that futures contracts, by default, do not roll over at expiration.  The TWS trading platform, however, does provide a feature referred to as the 'Automatic Futures Rollover Message' which, when activated, automatically displays a message on login eight days prior to expiration which allows one to select contracts for which the market data lines can be updated with the new front-month contracts.  Note that this will only serve to update the market data line and will not execute a trade unless the accountholder acts to transmit an order.  Any orders transmitted for roll over purposes are subject to the standard commission and fee schedule. 

The following steps are to be performed in order to activate this feature:

1. Click the Configure wrench icon in the trading window

2. In the left pane of Global Configuration, select General;

3. In the right pane, check Auto future rollover;

To view eligible futures rollovers within TWS, select Futures Rollover from the Ticker menu and then check all contracts that you want automatically updated to the new front month.

Also note that with the exception of certain currency futures contracts, IB does not allow for the actual physical delivery of underlying commodities.  Contracts which settle by physical delivery must be rolled over or closed out prior to a close-out deadline or face forced liquidation by IB.   Please refer to the website under the Trading and then Delivery, Exercise & Actions menu options for additional details as this deadline will vary by product.

The answer depends upon whether the assignment occurred at expiration or prior to expiration (i.e., an American Style option).  At expiration, many clearinghouses employ an exercise by exception process intended to ease the operational overhead associated with the provision of exercise instructions by clearing members.  In the case of US securities options, for example, the OCC will automatically exercise any equity or index option which is in-the-money by at least $0.01 unless contrary exercise instructions are provided by the client to the clearing member. Accordingly, if the long option has the same expiration date as the short and at expiration is in-the-money by a minimum of the stated exercise by exception threshold, the clearinghouse it will be automatically exercised, effectively offsetting the stock obligation on the assignment.  Depending upon the option strike prices, this may result in a net cash debit or credit to the account.

If the assignment takes place prior to expiration neither IB nor the clearinghouse will act to exercise a long option held in the account as neither party can presume the intentions of the long option holder and the exercise of the long option prior to expiration is likely result in the forfeiture of time value which could be realized via the sale of the option.