While there are a couple differences between how brokers look at ITM options these days, most ITM options will be automatically exercised based on the 4 p.m. Regardless of wether you choose to exercise your option or not, you have to make the decision fast! But there is a little twist with Index Options which expire on a completely different day and have a very unique overnight trading policy.
Cash settled index options (RUT, SPX, etc.) stop trading on Thursday, but settle at the opening price on Friday. Cash settled means that at settlement if you decide to exercise the options you don't get the underlying security. Even though options technically don’t expire until noon on Saturday (again not when they are last traded in the open market), you need to make your final decision ASAP. But what most people don’t know is that overnight trading can dramatically effect your positions.
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