Early Exercise


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Early Exercise (assignment)

The exercise or assignment of an option contract before its expiration date.

Early Exercise

A situation in which an option contract is exercised before its expiration date. American-style options allow early exercise, while European-style options do not.

early exercise

The exercise of an option before it expires. Although somewhat unusual, an option holder may decide on early exercise in order to receive an upcoming dividend (in the case of a stock option) or in order to satisfy another commitment.
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However, risk aversion may not be the only motivation for early exercise by executives.
Exercises of executive stock options on the vesting date
The company president and chief executive officer, Peter Barnes, said, 'The early exercise of warrants provides Silver Wheaton with significant funds, at an attractive cost of capital, for the continued expansion of our portfolio of silver interests.
Silver Wheaton Closes Early Exercise of Warrants
Zivney, 1991, "The Value of Early Exercise in Option Prices--An Empirical-Investigation", Journal of Financial and Quantitative Analysis, 26:129-138
15020540 Option exercise tests
Exhibit 3 extends the example to a 10-period binomial with the expectation of early exercise when the underlying share price reaches 1.
Valuing employee stock options using a lattice model
A second implication is that restrictions on early exercise may have a significant effect on the firm's ESO cost.
An upper bound for the firm's cost of employee stock options
The early exercise program resulted in the exercise of 878,800 July 2011 warrants at $1.
United States : DiaMedica Receives $1.7 Million Through Warrant Exercise

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