Premature Exercise

0.01 sec.

Premature Exercise

A situation in which an option holder exercises the option before the expiration date. For example, suppose one has a call to purchase shares at $10 each that does not expire for some time. If the current price of the shares is $35, the holder may find it advantageous to exercise prematurely because there is no guarantee that the shares will remain that high closer to expiration. Premature exercise can be disadvantageous to the writer of the option, depending on his/her option strategy.

premature exercise

Exercise of an option by the owner before the expiration date. Although most options are exercised near expiration, an owner occasionally finds it advantageous to exercise prematurely. Such an action will often foul up the option writer's plan, in which instance the writer must sell (with a call) or purchase (with a put) the stock earlier than expected.

Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content.

?Page tools

Printer friendly
Cite / link

Feedback
Add definition

Mentioned in	?		References in periodicals archive	?		Financial browser	?		Full browser	?
No references found			Jeff Powell, Daily Mail: This premature exercise was necessitated by the potentially suicidal timing of England's toughest World Cup qualifying match at their most vulnerable point of the calendar year. Football: Absence of ace Gerrard was a crucial factor by The Racing Post (London, England) If you make an acquisition for cash, it will result in the premature exercise of an option on the target firm, which will lower the value of the option. Stock options are not an expense by Rozycki, John J. / Financial Executive			preferred creditor Preferred Dividend Coverage Preferred Dividend Coverage Ratio preferred equity Preferred Equity Redemption Stock Preferred habitat theory Preferred Provider Organization Preferred Redeemable Increased Dividend Equity Security Preferred Shares Preferred Stock Preferred Stock Agreement Preferred Stock Ratio PREG Pregao a viva voz Pregnancy Discrimination Act Prejuizo liquido Prelacion prelease Prelievo Preliminary Estimate preliminary injunction Preliminary Prospectus Preliminary Scale preliminary title report Premature Distribution Premature Exercise Premier appel public a l'epargne Premier entre, dernier sorti Premier entre, premier sorti Premievrije polis Premio Premio de permanencia Premio nao ganho Premio nivelado Premio su rimborso anticipato premises premises liability premium Premium Bond Premium Income premium put Premium Put Convertible Premium Raid Premium Recovery Period Prensa financiera Prenuptial Agreement preopening indication Prepackaged Bankruptcy Prepaid Expense prepaid expenses prepaid interest			premature birth premature birth premature birth Premature burial Premature Centromere Division Premature Centromere Division of the X Chromosome Premature Child Premature Chromatid Separation Premature climax Premature climax premature complex Premature Constriction of the Ductus Arteriosus premature contact premature contact premature contact premature contact premature contraction Premature Coronary Artery Disease Premature Curing premature delivery Premature Descent Alert Premature distribution Premature Distributions Premature Drying of Plants premature dud premature ejaculation premature ejaculation premature ejaculation premature ejaculation premature ejaculation Premature Exercise Premature Exercises premature heartbeats premature heartbeats premature heartbeats premature heartbeats premature impulse premature infant premature infant premature infant premature infant Premature Infant Pain Profile Premature infants Premature infants Premature Junctional Beat Premature Junctional Complex Premature Junctional Contraction premature labor premature labor premature labor premature labor premature labour premature labour premature labour premature luteolysis Premature Male Pattern Baldness Premature menopause Premature menopause Premature menopause Premature Mitral Valve Closure premature newborn

Financial Dictionary

Free Tools:	For surfers: Free toolbar & extensions \| Word of the Day \| Help For webmasters: Free content \| Linking \| Lookup box \| Double-click lookup

Disclaimer
All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional.