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Options Exercise, Assignment, Risks & Margin

How do I exercise an option in the Options by UOB Kay Hian app?
Go to Portfolio > Positions > Options > tap the relevant option position twice to open the overflow menu > select Exercise Option > follow the prompts to complete the exercise instruction.
Please submit your exercise instruction before the option’s expiration date.
Can an option seller be assigned before expiration?
Yes. Holders of American-style options may exercise their options before expiration, which may result in assignment to the option seller. Upon assignment, the seller will be obligated to buy or sell the underlying shares. If the client has insufficient funds or shares to meet the assignment obligation, the broker may liquidate positions or take other necessary action to meet the obligation.
How do I know if an option has been assigned?
You will receive a notification of the option assignment via your Message Center. Your Trade Confirmation Report will show the closing option transaction and any resulting stock transaction under the Trades section, with “Ex” indicating Exercise and “A” indicating Assignment.
Any resulting stock position will be reflected in your account after the overnight system update.
What are the key risks of options trading?
Options trading involves significant risks and may not be suitable for all investors. Risks may include:
- Loss of premiums paid.
- Significant losses arising from adverse market movements.
- Margin calls and increased margin requirements.
- Assignment risk.
- Reduced liquidity during volatile market conditions.
- Options expiring worthless.
- Forced liquidation of positions if margin requirements are not met.
Can I lose more than my initial investment?
Yes. While buyers of options generally risk losing the premium paid, certain options strategies may result in losses exceeding the initial amount invested. Uncovered (naked) option positions may expose investors to substantial or theoretically unlimited losses.
What is an uncovered (naked) option?
An uncovered (naked) option is an option sold without holding the underlying asset or an offsetting position. Such strategies involve significantly higher risk and may result in substantial losses if the market moves unfavourably.
How are margin requirements for options trading determined?
Margin requirements are governed by rules established by the Options Clearing Corporation (OCC) and may be subject to additional risk-based requirements applied by our execution partner. Applicable margin requirements may vary based on the strategy used, positions held, portfolio composition and prevailing market conditions.
Can margin requirements change?
Yes. Margin requirements may be adjusted from time to time due to changes in market conditions, volatility, portfolio risk, concentration risk or other risk management considerations.
Why might my margin requirement be higher than the standard OCC requirement?
Additional margin requirements may be imposed based on the risk assessment and margin methodology applied by our execution partner. As a result, the effective margin requirement may exceed the minimum regulatory requirement established by the OCC.
What happens if I do not maintain sufficient margin?
To avoid liquidation, please ensure that your Excess Liquidity remains positive at all times.
Notes:
- Only USD cash is accepted as margin collateral for your US Stock Options account.
- Shares may only be used for covered call positions and do not receive margin value.
- Funds in your other UOBKH accounts cannot be used to meet the margin requirements of your US Stock Options account.
- If your Excess Liquidity becomes negative, your positions may be liquidated without prior margin call, even if you have sufficient funds in another UOBKH account.
What happens during periods of high market volatility?
During periods of heightened volatility:
- Option prices may fluctuate significantly.
- Liquidity may decrease.
- Margin requirements may increase.
- It may become more difficult to close positions at desired prices.
- Trading interruptions or market disruptions may occur.
What should I consider before trading options?
Before trading options, you should:
- Understand how options work and the associated risks.
- Assess your investment objectives, financial situation and risk tolerance.
- Recognise that margin requirements may change over time.
- Ensure you have sufficient financial resources to meet potential obligations.
- Review all relevant disclosures, customer agreements and risk statements carefully.
- Monitor your account regularly and take appropriate action when required.

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Options Exercise, Assignment, Risks & Margin

How do I exercise an option in the Options by UOB Kay Hian app?
Go to Portfolio > Positions > Options > tap the relevant option position twice to open the overflow menu > select Exercise Option > follow the prompts to complete the exercise instruction.
Please submit your exercise instruction before the option’s expiration date.
Can an option seller be assigned before expiration?
Yes. Holders of American-style options may exercise their options before expiration, which may result in assignment to the option seller. Upon assignment, the seller will be obligated to buy or sell the underlying shares. If the client has insufficient funds or shares to meet the assignment obligation, the broker may liquidate positions or take other necessary action to meet the obligation.
How do I know if an option has been assigned?
You will receive a notification of the option assignment via your Message Center. Your Trade Confirmation Report will show the closing option transaction and any resulting stock transaction under the Trades section, with “Ex” indicating Exercise and “A” indicating Assignment.
Any resulting stock position will be reflected in your account after the overnight system update.
What are the key risks of options trading?
Options trading involves significant risks and may not be suitable for all investors. Risks may include:
- Loss of premiums paid.
- Significant losses arising from adverse market movements.
- Margin calls and increased margin requirements.
- Assignment risk.
- Reduced liquidity during volatile market conditions.
- Options expiring worthless.
- Forced liquidation of positions if margin requirements are not met.
Can I lose more than my initial investment?
Yes. While buyers of options generally risk losing the premium paid, certain options strategies may result in losses exceeding the initial amount invested. Uncovered (naked) option positions may expose investors to substantial or theoretically unlimited losses.
What is an uncovered (naked) option?
An uncovered (naked) option is an option sold without holding the underlying asset or an offsetting position. Such strategies involve significantly higher risk and may result in substantial losses if the market moves unfavourably.
How are margin requirements for options trading determined?
Margin requirements are governed by rules established by the Options Clearing Corporation (OCC) and may be subject to additional risk-based requirements applied by our execution partner. Applicable margin requirements may vary based on the strategy used, positions held, portfolio composition and prevailing market conditions.
Can margin requirements change?
Yes. Margin requirements may be adjusted from time to time due to changes in market conditions, volatility, portfolio risk, concentration risk or other risk management considerations.
Why might my margin requirement be higher than the standard OCC requirement?
Additional margin requirements may be imposed based on the risk assessment and margin methodology applied by our execution partner. As a result, the effective margin requirement may exceed the minimum regulatory requirement established by the OCC.
What happens if I do not maintain sufficient margin?
To avoid liquidation, please ensure that your Excess Liquidity remains positive at all times.
Notes:
- Only USD cash is accepted as margin collateral for your US Stock Options account.
- Shares may only be used for covered call positions and do not receive margin value.
- Funds in your other UOBKH accounts cannot be used to meet the margin requirements of your US Stock Options account.
- If your Excess Liquidity becomes negative, your positions may be liquidated without prior margin call, even if you have sufficient funds in another UOBKH account.
What happens during periods of high market volatility?
During periods of heightened volatility:
- Option prices may fluctuate significantly.
- Liquidity may decrease.
- Margin requirements may increase.
- It may become more difficult to close positions at desired prices.
- Trading interruptions or market disruptions may occur.
What should I consider before trading options?
Before trading options, you should:
- Understand how options work and the associated risks.
- Assess your investment objectives, financial situation and risk tolerance.
- Recognise that margin requirements may change over time.
- Ensure you have sufficient financial resources to meet potential obligations.
- Review all relevant disclosures, customer agreements and risk statements carefully.
- Monitor your account regularly and take appropriate action when required.