Exercise and close

[jimmyjunaidi]

Hi, I'm still new to options.
I'm trading with optionsxpress and they have "exercise and close" and "exercise".
I'm wondering, would I need the amount of money to buy the shares at exercise price for "exercise and close"?
And when can I do "exercise and close"?

I've bought LEAPS for January 2013 expiration. It's for long-term investment, but I'm afraid when the time to exit has come, I can't sell my position so that I have to exercise it and I don't have enough money to buy the stock.

Please help.


Thank you

 

[Martinghoul]

You'll get a margin call... If you can't cover it, the broker will exercise and close the trade for you, at whatever price they can. You should discuss this with your broker.

 

[jimmyjunaidi]

Is there any disadvantages for the scenario you just said?
Suppose I ask my broker to exercise and close it immediately.

Is there any penalty for margin call?
Or is it the same with forex or stocks margin call where your position would be forced to sell and nothing else happen. (except shame of margin call :cheesy: )