WSWealthsimple Options Mechanics — Reference
help.wealthsimple.com · retrieved 2026-06-23
Authoritative reference for how Wealthsimple handles 0DTE options at expiry — the rules that define the engine's realizable basis. Transcribed from Wealthsimple's own help articles (linked per section). The headline: defined-risk spreads are auto-liquidated at 3:15 PM ET on expiry day — they do not ride to settlement — with one narrow skip for clearly-worthless spreads.
What this means for the engine (the realizable basis)decision-relevant
Winners that are clearly going to expire worthless (every leg OTM, small notional) are skipped by auto-liquidation → they expire worthless → you keep the full credit. Measured impact (2026-06-23, value-based re-measure on real chains): immaterial for the live core — the credit shorts still carry value at 3:15, so they're auto-liquidated, not skipped. The realizable PF baselines are correct as-is.
Everything else with an expiring short leg (near-the-money or breached) is auto-liquidated at 3:15 PM ET via limit orders worked through the afternoon → closed at market value, ≈ the 15:30 mark. This is the realizable basis the engine prices against (NOT hold-to-expiry).
Why it isn't optional: a spread only stays "defined risk" if both legs settle together. If just the short is assigned and the long expires worthless, you hold naked stock overnight with gap risk — a $600 defined loss became $9,600 in Wealthsimple's own example. Auto-liquidation closes the spread before either leg reaches exercise/assignment.
- Confirms D21 / the book's "~3:15 forced close" realizable basis (reverses the brief "winners ride to expiry" reading — that came from the auto-sell article, which is long-options-only).
- This is exactly the engine's
ExitAtPinRisk model: close if near a short strike, ride if comfortably OTM.
- Action: keep your USD account enabled (see FX section) and you can always close manually before 2:40 PM ET to control timing/price.
Auto-liquidation of expiring spreadsmandatory · the core rule
What it is
The process that closes any spread with a short leg expiring today. Runs automatically on expiry day; not optional; applies even if you've turned off auto-sell. Separate from auto-sell (auto-sell = long ITM options; auto-liquidation = expiring spreads).
Schedule (ET)
- 2:40 PM — stop accepting new sell-to-open orders on contracts expiring today.
- 2:45 PM — cancel pending sell-to-open orders on expiring contracts.
- 3:15 PM — auto-liquidation begins: submit limit orders to close all qualifying spreads, adjusting the limit through the afternoon to fill before the close.
Which spreads
Vertical, calendar, diagonal, butterfly, iron butterfly, condor, iron condor — any with a short leg expiring today.
The two skips (no meaningful assignment risk)
- Calendar/diagonal spreads where the short leg is OTM.
- Spreads where every leg is OTM, worthless, and notional < $10,000,000 USD. (1 SPY contract ≈ $60k notional, so the notional test is always met — the binding condition is "clearly worthless.")
FAQ: "most spreads with a short leg expiring that day will be closed." Fill price = a limit order from market quotes, adjusted for liquidity. No fees. Rare partial/unfilled contracts fall through to overnight exercise/assignment.
Auto-sell (long options only)≠ auto-liquidation
- Tries to sell ITM long options if you don't have the funds/shares to exercise them. Starts 3:30 PM ET (12:30 on early-close days).
- Checks at 30 and 10 minutes before close. If you have funds/shares → it exercises instead.
- Does NOT apply to short option strategies — those are handled by auto-liquidation (above).
- Won't fire if: illiquid (no market), late OTM→ITM move after the check, a pending limit sell exists, or sale proceeds < fees.
- On by default; can be turned off in app settings (before 3:30 PM ET on expiry day) — but turning it off does not affect auto-liquidation.
Exercise & assignment (if a leg reaches settlement)overnight process
Long option — exercise
- ITM by $0.01+ at expiry → auto-exercised (need funds/shares available before 3:30 PM ET; reserved after close). No fee for auto-exercise; fee for early exercise.
- Long call exercise → buy 100 shares/contract at strike (need the cash). Long put exercise → sell 100 shares/contract (need the shares).
- Opt-outs (call support before 3:30 PM ET): "do not exercise," early exercise, or exercise-by-exception (OTM).
Short option — assignment
- ITM by $0.01+ at 5:30 PM ET on expiry → at risk of assignment (random lottery next morning). Can be assigned early (American-style) at the holder's discretion.
- Short call assigned → deliver 100 shares/contract (shares removed, proceeds deposited). Short put assigned → buy 100 shares/contract at strike (cash deducted, shares deposited). No fees for assignment.
Spreads: account, margin & the FX trapCAD-account hazard
- Requires a margin account with USD enabled. Not allowed in registered (TFSA/RRSP) or non-margin accounts.
- Credit spread margin held = (strike width × 100) − credit; released when closed/expired. Debit spread = no extra margin (debit is the max loss).
- No commissions on spreads; FX + exercise fees still apply.
The FX trap (CAD-only account): if a spread expires ITM and reaches assignment+exercise, you buy/sell ~$10k of stock per side, and the 1.5% FX fee hits the full share value, not your small defined loss. Wealthsimple's example: a $50 defined loss balloons to ~$350 (≈7×). A USD account avoids the conversion entirely → you get exactly the defined loss. Auto-liquidation (closing the spread for its small net value) also avoids it.
Terminology (Wealthsimple definitions)reference