A rule on many derivative exchanges preventing the exercise of too many option contracts by one investor over a given period of time. The exercise limit usually lasts five days; that is, no person or company may exercise more than the stated number of options on the same underlying asset over any five business days. Exercise limits exist in order to promote market stability by preventing a single investor from taking over too much of a market too quickly.
The maximum number of option contracts that a holder can exercise during a specified period. This limit is established by the exchange on which the option trades.