Can an option be exercised if it expires out of the money?

Yes. Automatic exercise only applies to options finishing at least a cent in the money. Separately, a holder may send an instruction to exercise one that closed slightly out of the money. Holders have a reason to do that when after-hours news pushes the stock through the strike.

What happens if a short put is assigned over the weekend?

The put leaves the account and a stock position bought at the strike price appears in its place, usually visible before the next session opens. Nothing can be traded until the market reopens, so any gap in the share price at the open lands on the new position in full.

How close to the strike counts as pin risk?

No rule draws the line, so it comes down to how far an after-hours move could carry the stock. A short option a few cents from the strike on the last afternoon is the plain case: a small move after the close could change the holder's decision, and closing the position removes the question.

Pin Risk: When a Stock Closes Near Your Strike at Expiration

Expiration Friday, the closing bell. Your short 100 put is two cents out of the money. The option has stopped trading. Whether you own stock on Monday is now up to someone else.

That wait is pin risk. It belongs to sellers. A long option holder decides; a short option writer only finds out.

The rule that sets the default

The default is only a default. A holder can file a do-not-exercise instruction on an option that closed a cent in the money, and a holder can also choose to exercise an option that closed a cent or two out of the money. Both happen, because the 4:00 p.m. close is not the last price anyone sees: stocks keep trading after the close, and news can land after the option has stopped trading while holders still have time to submit instructions.

So a stock parked right on your strike leaves three outcomes open: assigned, not assigned, or partly assigned if you sold several contracts and the holders on the other side made different choices.

A worked case

You go to bed with no position. You might wake up owning $10,000 of stock bought at $100. It would be the weekend, with no way to hedge until Monday’s open. If the stock drifted lower after hours, the holder had every reason to exercise and push that loss onto you; if it drifted higher, you probably were not assigned, and the put expired worthless as you hoped.

The worst part is the timing. The assignment notice usually shows up in your account after the weekend has started, when you can see the position and cannot do anything about it.

Why sellers care about the size

For a cash-secured put, surprise assignment is inconvenient. You had the cash set aside.

For a spread, it can be much worse. Suppose you hold a put spread and the short strike finishes a cent out of the money while the long strike is further out, so your long leg expires worthless and your short leg gets exercised anyway; you now own 100 shares per contract with no protection under them, and the account may not have the buying power to carry the stock. Brokers handle that in their own ways. Some liquidate the stock on Monday at whatever price the market offers.

Short calls carry the mirror image. An unexpected assignment leaves you short 100 shares per contract. The risk on a short stock position has no upper limit.

How traders avoid it

The fix is simple and costs a little money. Close short options that are near the strike before the final session ends.

Buying back a put that is two cents out of the money in the last hour usually costs a few cents plus commission. That is the price of knowing what you own on Monday. For most accounts it is cheap, and closing an option or letting it expire lays out when each choice makes sense.

A few other habits help:

Check every short option on expiration morning. Flag any within about a strike of the money.
Close spreads as a unit. Leaving the long leg to expire while the short leg sits at the strike is how an unhedged position appears.
Know your broker’s exercise and assignment cutoff times, which differ from firm to firm.

Same-day and weekly options make pin risk more common, simply because there are more expirations, and same-day options reward speed makes the case that short-dated positions need a plan for the last hour before they are opened.

Where pinning shows up on a screen

Some traders watch strikes with large open interest into expiration, on the theory that hedging flows around those strikes can hold a stock near them. That theory is contested, and the chain alone does not prove it. What you can see is the closing price relative to your strike, and that is the number that matters.

Your statement will show the result the next business day: either the option disappears as expired, or it disappears as assigned and a stock position takes its place at the strike price.

What people get wrong

Many sellers assume an option that closes out of the money cannot be exercised. It can, and holders do exercise when after-hours news gives them a reason. Others assume that a closing price one cent in the money guarantees assignment, which also fails when a holder opts out.

Pin risk is related to early assignment, which can happen on any day before expiration, and the two share a lesson: a short option stays an obligation until you close it.