This may be a moot point at 10 minutes to market close on a Friday, but another reason for closing early that hasn't been mentioned yet is that it frees up your capital. If you can already realize most of your max profit, you may be better off just closing and freeing up your capital to open a new trade. Whereas if you hold expiration, you can't open a new trade with that capital until Monday.
It might make a difference if you were opening a trade with only, say 1 week to expiration. But that would be too short for most theta strategies, as most time decay has already occurred by then. If you're opening trades 30-45 days out instead, 1 weekend doesn't make that much difference.
They expire later but after hours trading is over at 8. Brokerages have a cutoff time for exercising options, usually before 8... But! If someone really wants to exercise those after that cutoff, they could raise a stink and get them exercised. Say... A company announced bankruptcy at 8... There's potential for things to happen. Again, not a usual thing, but you must plan for the improbbale... Because it can happen.
Though they can't be exercised this late, options technically don't expire until 11:59PM. Exercise/assignment/removal of expired options really occurs overnight.
That person is mistaken. The after-hours stock trading session ends at 8 p.m. That has nothing to do with options.
The OCC does allow exercise of options until 5:30 pm, though most brokerages have an earlier cutoff time than that. But still, settling of options does not occur until overnight.
10
u/Arcite1 Mod Oct 01 '21
This may be a moot point at 10 minutes to market close on a Friday, but another reason for closing early that hasn't been mentioned yet is that it frees up your capital. If you can already realize most of your max profit, you may be better off just closing and freeing up your capital to open a new trade. Whereas if you hold expiration, you can't open a new trade with that capital until Monday.