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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 ?
They should remove some of the risk by exercising a few and immediately selling the stock, paying the taxes and reinvesting the proceeds in other stocks and wealth-building assets.
Employees can achieve an extra element of gain deferral by exercising an ISO with stock of the employer corporation.
Consider exercising options with the use of existing stock.
Accordingly, one elegant study cited improvement in the pain of fibromyalgia both with patients taking amitriptyline alone, with patients only exercising, and with patients receiving a combination of amitriptyline and aerobic exercise.
Instead, people should shoot for a heart rate while they're exercising that's right for their age.
Controversy on this issue arises because an employer issuing the options and the employees exercising the options are paying employment tax upfront on an intrinsic value of a stock, a value that it may never realize if the stock declines in price, as was the case in many recent dot-com situations.
When an athlete experiences fatigue while exercising, it is generally because he has exhausted the smaller, weaker muscle involved in the multi-joint movement.
A study of a gene associated with the development of strong bones indicates that the importance of exercising and drinking milk varies with the type of vitamin D receptor (VDR) gene your cells harbor.
Until now, the SEC's insider rules have limited some executives' and insiders' ability to realize gain from the sale of company stock for six months after exercising a stock option.
While a majority report exercising fairly regularly (67 percent exercise a few times per week), approximately three in four adults say they would exercise more if they could fit it into their daily routines (77 percent).
It is usually never used alone but in combination with a diuretic and/or beta-blocker and would be a poor choice for someone exercising.
Since stimuli are an important aspect of development, it is thought that these babies, having been stimulated through their exercising moms, have developed better than others.