Enhance Speed, Accuracy, and Front Office Control

Optimizing Bulk Option Exercise Processes in Allegro

Streamlining Option Exercise Processes for Front Office Efficiency

Efficient option exercising is vital for Front Office operations, facilitating capitalization on market opportunities, effective risk management, and profit maximization. This strategic practice enables informed decision-making regarding option rights utilization, portfolio management and financial performance.

Within the Allegro system, executing option trade exercises is manual, requiring all individual trades to be handled through the Exercise pane within the Trade Execution view. This method, encompassing option position querying, exercise row creation, and trade updates, proves time-consuming, especially with a substantial monthly volume of several hundred options trades. To address this challenge and respond promptly to market fluctuations, the Front Office team actively seeks a solution to streamline exercise processes and enhance operational efficiency for their ETRM systems.

Addressing Operational Challenges for Efficient Options Exercise Process

The current process entails individual trade exercises through the Exercise pane in the Trade Execution view. Users add a row to exercise either a partial or full quantity from the original option position, specifying the exercise date and relevant time periods. Notably, certain inputs like price, unit, and price index are redundant as they can be derived from the option’s strike price and original position. However, upon saving, a new position is recorded without verifying the option position Boolean.

Although this process is functional, it poses operational inefficiencies. Manual input requirements and the absence of an automatic option position check upon saving may result in errors or oversights. Improving this system by automating checks and minimizing manual steps could significantly enhance efficiency, mitigating the impact of these operational challenges on the business.

Streamlined Solutions for Optimal Option Exercise and Expiration Management

Energy trading firms need more than functional systems; they need intelligent, scalable workflows that drive speed, accuracy, and control. Our experts have built a purpose-fit solution that brings automation, control, and transparency to this high-impact function. By rethinking how positions are reviewed and acted upon, Value Creed’s automated framework reduces manual interventions, mitigates missed opportunities, and ensures alignment with your trading strategy.

Grid Job runs daily after Settlement Valuation

Positions exercised/ expired per rules

Use Bulk Exercise for special cases

Status shown in grey in Bulk Exercise view

The Scheduled Grid job intelligently determines the moneyness of each option by comparing strike prices to the most recent market data. It runs automatically each day post-settlement, configured with parameters such as valuation mode, tradebook, look-back window, and more, ensuring precise calculations without burdening your team.

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In this enhanced view, Value Creed enables the system to automatically flag expired out-of-the-money options and execute in-the-money EURO and AMER style options on their expiration date. Our automation ensures full position-level exercises, only reducing the risk of partial errors and missed settlements. Trades marked with the “Auto-Exercise” type are exclusively targeted, offering a clean, governed approach. Any exception handling required can be managed directly through the Bulk Exercise Functions without disrupting the broader process.

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Key Benefits of the Automated Solution

Holistic Efficiency Enhancement

Implementation of this comprehensive solution helps to efficiently manage option exercise and expiry across various positions, ensuring a cohesive workflow.

Seamless Automated Integration

The Integrated Grid Schedule tasks seamlessly enhances automation, promoting a smoother workflow.

Precision through Rule-Based Logic

Application of refined rules based on Option Moneyness, Expiration Date, and Market Pricing Date, ensure precise decision-making.

Parametric Accuracy and Preconditions

Ensure accuracy with parameterized valuation modes and time frames, requiring Settlement valuation as a crucial precondition for meticulous automation.

Enhanced Visibility and Flexibility

Bulk Exercise view boosts visibility, flags expired positions, automates in-the-money exercises, and allows manual re-launch with position-level control.

Maximizing Precision and Efficiency with Value Creed's Expert Solutions

Our automated solution transforms option exercise and expiration by replacing manual processes with a streamlined, rules-driven workflow for the Front Office. Integrated Grid Schedule tasks and a refined Bulk Exercise view reduce errors, ensure precise position records, and enhance decision-making through automated checks for moneyness, expiration, and pricing dates. By prioritizing moneyness determination and settlement valuation before Bulk Exercise visibility, the solution delivers unmatched accuracy and the unique control of allowing only full position-level exercises—driving greater efficiency and precision in financial operations.

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Optimizing Bulk Option Exercise Processes in Allegro

Streamlining Option Exercise Processes for Front Office Efficiency

Addressing Operational Challenges for Efficient Options Exercise Process

Streamlined Solutions for Optimal Option Exercise and Expiration Management

Click to Enlarge >

Click to Enlarge >

Key Benefits of the Automated Solution

Holistic Efficiency Enhancement

Seamless Automated Integration

Precision through Rule-Based Logic

Parametric Accuracy and Preconditions

Enhanced Visibility and Flexibility

Maximizing Precision and Efficiency with Value Creed's Expert Solutions

Recommended Resources

Ready to get started?