Exercising the option


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Exercising the option

The act of buying or selling the underlying asset via the option contract.

Exercise

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.
References in periodicals archive ?
As a result of exercising the option, the employee includes $25,000 as compensation income under Sec.
After exercising the option, A owns 100 shams of ISO stock, as follows: Regular tax basis Shares (per share) Holding period 40 $5 Began June 1, 1999 60 $0 Began June 1, 2000
If, at the end of the 20-year sublease primary term, the headlease residual is worth more than the payment required on the fixed-payment option, FM will capture this excess value by exercising the option, leaving X with only the proceeds of the option.