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My credit spread expired between the strikes. What happens now?

The short leg finished in the money and the long leg expired worthless. That means assignment over the weekend, 100 shares on Monday morning, and a loss that is no longer capped at the spread's max loss.

Options guide · 10-minute read · Updated 2026-10-29

What just happened to you

Your spread had two legs. The one you sold finished in the money, so it gets exercised against you. The one you bought finished out of the money, so it expired worthless and protected nothing.

That is the outcome nobody warns you about: there is no tidy cash settlement. On a put spread you wake up owning 100 shares at the strike you sold, with no put underneath them. On a call spread you wake up short 100 shares, with no call above them.

Until you close that stock position, your loss is open-ended in the direction the stock was already moving. The max loss you worked out when you opened the trade stopped applying at 4pm on Friday. If the stock has not moved since, the damage is roughly what closing the spread would have cost. If it gapped, it is not.

Why the broker exercises it without asking you

US stock options that finish in the money by a penny or more are normally exercised automatically by the clearing house, whether anyone clicks anything or not. The holder of the option you sold does not even have to decide.

So three things happen over the weekend:

1. Friday 4pm. Trading stops. Your short leg is in the money, your long leg is not.
2. Saturday. The short leg is exercised. Your broker assigns you.
3. Monday morning. The stock position is in your account, priced at whatever the market opens at, not at Friday's close.

You can tell your broker not to exercise an option you bought, but you have no say over the one you sold. For the penny-in-the-money edge case, see options expired in the money by a penny.

The numbers, worked out

(Hypothetical. An illustration, not a trade idea.)

Northwind Freight trades at $55. Thirty days out you sell a put credit spread:

• Sell the $50 put for $1.30
• Buy the $45 put for $0.50
• Net credit $0.80, so $80 in your account

The spread is $5 wide, so:

• Max gain: $80.
• Max loss: (5 × 100) − 80 = $420.
• Break-even: $50 − $0.80 = $49.20.

On expiry Friday, Northwind closes at $48.00. The $50 put is in the money by $2.00. The $45 put is worthless.

What closing on Friday afternoon would have cost. The $50 put trades near its intrinsic value, about $2.00, and the $45 put is bid about $0.05. Buying the spread back costs about $1.95, so $195. Against $80 of credit, that is −$115.

What letting it go does instead. Over the weekend you are assigned on the $50 put. $5,000 leaves your cash and 100 shares arrive, bought at $50. The $45 put is gone.

Your cost per share is $50 − $0.80 = $49.20, the same number as your break-even.

At Friday's close of $48 your shares are worth $4,800, so the position shows −$120. Almost identical to closing. The $5 difference is the nickel of long put you threw in the bin.

Then Monday happens

Northwind's biggest customer files for bankruptcy over the weekend. The stock opens at $44.

• 100 shares at $44 are worth $4,400.
• You paid $5,000 for them, and you kept $80 of credit.
• You are at $4,400 − $5,000 + $80 = −$520.

Your spread's max loss was $420. You are $100 past it.

Check that $100 a second way. At $44 the stock is $1 below your long $45 put strike. A live spread would have paid you (45 − 44) × 100 = $100 of protection there. The put expired Friday, so you did not get it. $420 + $100 = $520. The two routes agree.

Every dollar Northwind falls below $45 from here costs you another $100, with nothing underneath.

Read the top row before you get comfortable with it. A weekend gap up would leave you better off than the spread's $80 max gain. That is why the gamble is tempting, and it is a coin flip you were not paid to take.

The other two endings

Both legs in the money. If Northwind had closed at $43, both puts finish in the money. The short put assigns you 100 shares at $50 and your long put exercises, selling them at $45. The two net out, you hold no stock on Monday, and you take exactly max loss: 500 − 80 = −$420. This is the clean ending, and it is clean only because the long leg did something.

Pinned on the strike. If Northwind closes at exactly $50.00, nobody knows. The put is not in the money, so it should not be exercised, but holders can exercise anyway and some do. You may find out Monday that you own shares you were not expecting. That coin flip is pin risk.

What to do on Friday, and on Monday

Friday, before the close:

• If the short leg is in the money, or within about a dollar of the strike, close the whole spread. You are paying the last few cents of value to delete the weekend entirely.
• If you cannot close it because the market is too wide, close just the short leg and let the long one go. A naked long put cannot assign anything to you.
• Make sure the cash is there. If you have not got $5,000 and assignment happens anyway, your broker can close the position for you at the Monday open, at whatever price that is, and bill you the difference. That decision will not be yours.

Monday, if you are already holding the shares:

• You own stock at $50 in a company whose news just changed. The question is no longer about the spread. It is "would I buy 100 shares of this today at $44?"
• If yes, you can sell a covered call against them, which is the second half of the wheel strategy and exactly what a put seller with the full cash would be doing now.
• If no, sell the shares and take the −$520. A loss you keep holding is a new trade you never chose.
• If you were short shares from a call spread instead, that position borrows stock and can be bought in by the broker. Deal with it the same day.

In Canada, a registered account such as a TFSA or RRSP cannot hold a short stock position and often cannot hold spreads at all, and it has no margin to cover a $5,000 assignment, so your broker's rules on this are worth reading before you need them. The wider picture of what else you could have traded is in option strategies beyond the wheel.

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