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REDDIT

"Right, but not the obligation" : a myth for retail traders? Auto-liquidation despite a DNE.

D
May 23, 2026 · 08:02

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?