"Right, but not the obligation" : a myth for retail traders? Auto-liquidation despite a DNE.
u/detuma ·
Reddit — r/options
· May 23, 2026 at 08:02
· ⬆ 16 pts
· 💬 13 comments
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Hey everyone, looking for a sanity check / discussion on a structural issue with retail brokers that is driving me crazy.
We all know the textbook definition of a long option: It gives the buyer the right, but not the obligation, to exercise.
Here is the scenario I just dealt with:
I bought a 0DTE OTM call option.
I explicitly submitted a Do Not Exercise (DNE) instruction to my broker early.
According to the contract, my risk is strictly capped at the premium paid. With the DNE, there is zero risk of me ending up with shares I can't afford.
10 minutes before the close, the stock starts a massive squeeze toward my strike.
Before I can even capture the exploding premium, the broker’s automated risk desk steps in and force-closes/liquidates my position, wiping out all my potential gains right before the peak of the squeeze.
When I complained, the answer was the usual: "We have to manage our risk because you don't have the buying power for assignment."
But from a purely logical standpoint, what risk? I submitted a DNE. If it lands ITM, it expires worthless, I lose my premium, and nobody owes anyone anything.
If a broker can aggressively override a DNE and force-sell my contract whenever they feel like it, they haven't sold me "a right without an obligation" : they’ve sold me a derivative that forces me to sell early if I don't have a six-figure account to back up a phantom exercise risk.
How do you guys handle this?