The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer a user question that was submitted which is, “Can you exercise an option contract even if you don't have the buying power for the stock?” This is an interesting question, but basically, the person emailed in and said, “If I had a debit spread or a credit spread and I didn't have the buying power to exercise the option, could I still conceivably submit the order because it's covered by the other contract that’s out there?” And so, the short answer to this is probably no. Your broker is going to reject that order when they see it coming through. You could probably get all the way to submitting the exercise, but when it actually starts going through the system and through the technology to be able to actually exercise that contract, buy shares of stock or sell shares of stock depending on what contracts you’re trading, then it's likely going to get rejected at the broker because you don't have