Stock options traded on the Hong Kong Stock Exchange are American options. Therefore, the option sellers should be prepared to accept possible option assignments at any time, including the day the option is sold. Stock options are allowed to be bought and exercised on the same day, and they can also be exercised on the contract expiration date. In fact, most of the option positions are closed before expiration or expire without being exercised. However, for option holders, it may sometimes be more advantageous to exercise the option than to close the position.
The vast majority of exercises will be carried out automatically based on the closing settlement price on the expiration date. If you need to exercise early or waive your rights to exercise, please refer to [How can I early exercise options or waive my exercise rights]
As the option purchaser, if the option is out of the money on the expiration date, the expired option will have no value and there will be no exercise taken place; if the moneyness of the option is equal to or higher than 1.5% of the exercise price, the option will be automatically exercised, which will be completed in the form of a physical delivery.
As the option seller, when the option is exercised by the purchaser, the option clearing house will randomly match the open short position with the exercised option. If your account is assigned, you must either deliver the underlying stock (in case of a call option) or buy the underlying stock (in case of a put option). Both parties must deliver the underlying stock or pay the stock market price within the designated settlement time (the second trading day after the exercise). Please note that physical delivery must be made after the exercise of stock options, which is different from other cash-settled options.