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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 ?
However, it does apply to an option at the time it is exercised.
The tax return preparation files should include information on NQSOs exercised and ISO disqualified dispositions.
Under the temporary regulations, options were deemed exercised only if they contributed to an ownership change.
If a loss corporation does not treat an option to which one of the specific abuse factors applies as exercised, the corporation must disclose to the Service the terms of the option and all relevant facts and circumstances that affect the treatment of the option under the regulations.
Jane's options can be exercised prior to the stock vesting, subject to a buy-back by the company at the exercise price if she quits early.
The same amount of weight should be used for each leg when exercised separately.
If an ISO is exercised with previously acquired shares, resulting in a basis allocation between shares deemed acquired in exchange under section 1036 and other shares as described above, and there is then a disqualifying disposition of some of the shares acquired pursuant to the ISO, the stock with the lowest basis is deemed to be disposed of.
NASDAQ: CORX) today announced that it was extending the periods over which its Class C, Class A (NASDAQ: CORXW) and Class B warrants may be exercised by one year, nine months and one year, respectively.
and the Trustee, has received notice that the Call Warrant Holder has exercised its right to purchase the term assets of the trust on December 18, 2006 (the "Redemption Date).
the difference between the amount paid to exercise the ISO and the stock's fair market value (FMV)) is taxable at ordinary income rates in the year in which the option is exercised.
If the stock price at the option's expiration date exceeds the exercise price, the option is said to have intrinsic value and the options are assumed to be exercised.
Ken Cooper asked a room full of public-healthers who exercised regularly if they did it because of the evidence showing that it was good for their physical health (available even back then).