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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Finally, it is possible that a few inactive people are generous in their definition of "exercising every day." Even if such people are a small minority, they might report "exercising" every day, despite a sedentary lifestyle.
To offset the costs of exercising, the employee may wish to sell at least part of the exercised shares.
Sometimes, the consequences of exercising while injured can lead to permanent physical disability which prohibits future exercise, Raglin says.
An individual may be aware of the benefits of exercise (Turk, 1993), but may not be able to exercise or stretch at home without someone assisting who is also knowledgeable about proper methods of exercising and stretching.
422(a)(2) states that the employee must have been an employee beginning on the date that the option was granted and up to three months prior to exercising the option.
First it keeps athletes from feeling hungry and sluggish before and during the game, and secondly it helps to maintain optimal levels of energy (blood glucose) for the exercising muscles during training and competition.
"Exercising an option and using it as collateral for borrowing only makes sense if the stock goes up, which it doesn't always do--even though in the nineties it seemed a God-given inevitability," says Tim Kochis, president of Kochis Fitz, a San Francisco-based wealth management firm.
In retrospect, it is easy to see that Mary would have profited if she had sold the stock at its peak, immediately after exercising the ISOs.
Moreover, if an individual exercising an ISO holds the shares so acquired until death, the excess of the fair market value of the stock over its basis will escape income tax entirely by reason of the step-up of basis at death.
I have recently felt pain in my right groin area while exercising. Two years ago I had an inguinal hernia, in that same area, which required surgery.
"Surprisingly, if cold palatable beverages are within arm's length of well-trained, experienced, exercising athletes, most drink enough to offset sweat losses.