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To implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of a put) the underlying security.


In option contracts, to buy (in the case of a call) or sell (in the case of a put) the underlying asset. The option holder has no obligation to exercise the option, and only does so if he/she believes it benefits him/her. Depending upon the nature of the option, this may be done at any point during the life of the contract, or it may only be done on the contract's expiry date. The strike price of the sale is agreed-upon in the option contract, that is, before the option is exercised.


To require the delivery (for example, a call option) or to force the purchase (for example, a put option) of the option's underlying asset. Many options expire without being exercised because the strike price stated in the option is unfavorable to the holder.


When you act on a buying or selling opportunity that you have been granted under the terms of a contract, you are said to exercise a right.

Contracts may include the right to exchange stock options for stock, buy stock at a specific price, or buy or sell the security or product underlying an option at a specific exercise price.

For example, if you buy a call option giving you the right to buy stock at $50 a share, and the market price jumps to $60 a share, you'd likely exercise your option to buy at the lower price.

References in periodicals archive ?
Certain forward-looking statements contained in this news release, include, but are not limited to, information regarding the future economic performance and financial condition of the company, the company's ability to reduce its dependence on debt financing and reduce its leverage, the company's ability to meet its short and long-term liquidity needs, the plans and objectives of the company's management and the company's assumptions regarding such performance, financial condition, plans and objectives and whether the optionee on the Vacaville property exercises the option to purchase the land in April 2005.
In Letter Ruling 9752030,(39) the IRS ruled that a domestic company's stock option program, in which a warrant for the foreign parent's stock is transferred to the employee when he exercises the option and then immediately exercised for stock, qualifies under Sec.
United Carina will be the operator of the properties until it exercises the option, after which the properties will be operated by the Company and United Carina on a joint venture basis.