Vertical spreads
Why is it structurally inefficient to buy back a deep OTM credit spread for $0.01 instead of letting it expire?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Buying back a deep OTM credit spread for a penny can be inefficient because the commission cost may exceed the remaining value being closed, and many traders instead let it expire worthless, though this carries small pin and assignment risk if the stock moves unexpectedly before expiration.
How it works
Weighing transaction costs against residual risk is a personal decision, since some traders prefer the certainty of closing even a cheap spread to avoid any unexpected weekend price swings.
An example
A trader may choose to pay $0.65 in commissions to close a spread worth $0.01 simply to eliminate any remaining tail risk before a long holiday weekend.
Risk & limitations
OIC notes that letting options expire carries small but real risk of adverse late moves or unexpected assignment that a closed position would have avoided.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.