What happens to my account if I forget to order a "sell to close" option?
Let's suppose I put a "buy to open" for AIG at a strike price of $53.50. It expired on Friday June 17, 2016. However, I forgot to "sell to close" before it expired. AIG closed on Friday at $53.42, so there is some value in the option. What would happen to my account? Would I have to buy the 100 shares of stock at $53.42?
Based on your question, I am assuming you bought a call option on AIG with a strike price of $53.5. Since, at expiration the price of AIG was less than the strike price, it will expire worthless. If the price of AIG was above the strike price at expiration, you would have had the right to exercise the option ie purchase AIG at the strike price or just pocket the profit.
You are asking a good question. If the buy order expired, nothing happened in the account. You had no shares to sell. If you were able to buy the shares before the sell to close order executed, then it would have value. I am assuming none of this took place on margin, which would add another element into the situation. I hope this helps answer your question.
Yale Bock, CFA
Y H & C Investments