1. To decide not to
exercise an option. This occurs when an
option is
out-of-the-money on the
exercise date. That is, one may abandon an option if it is currently
unprofitable and thus highly unlikely to become profitable.
2. To withdraw one's claim to an
asset, especially an unprofitable one.
Corporations must file appropriate paperwork with the government to abandon assets. Alternatively, an individual may abandon both
real and
personal property. For example, a homeowner may leave his/her house and never intend to return. A squatter may then come to possess the home through
adverse possession. An important component of abandonment is the owner's intent never to return or otherwise possess the property again.
3. To opt out of a
forward contract according to the procedure specified therein. When one abandons a forward contract, one does not
buy or
sell the
underlying asset and it is not
delivered.