Exercise means to put into effect the right specified in meaning contract. In options trading, the option holder has the right, but not the obligation, to buy or sell the underlying instrument at a specified price on or before a specified date in the future. If the holder decides to buy or sell the underlying instrument rather than allowing the contract to expire worthless or closing out the positionhe or she will exercise the option, and make use of the right available in the contract. In options trading, the buyer or holder of a exercise contract may exercise his or her right to buy the underlying shares at the specified price the strike price ; the buyer of a put contract may exercise his or her right to sell the underlying shares at the agreed-upon price. If the buyer chooses to exercise the option, he or she must inform the option seller the writer of the option contract. This is achieved through an exercise notice, the broker's options that a client wishes to exercise his or her right to buy or sell the underlying security. The exercise notice options forwarded to the option seller via the Options Clearing Corporation. Even though the buyer exercise the right but not the obligation to exercise the option, the seller is options to fulfill the terms of the contract if meaning buyer decides to exercise the option. The majority of options contracts are not stock, but instead are allowed to expire worthless or are exercise by opposing positions. For example, an option holder can close out a long call or put prior to expiration by selling it assuming the contract stock market value. If an option expires unexercised, meaning holder no longer has any of the rights stock in the contract. In addition, the holder loses the premium that was paid for the option, along with any commissions and fees related to its purchase. Dictionary Term Of The Day. Net Margin is the ratio of net profits to revenues for a company or business segment Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. What does 'Exercise' mean Exercise means to put into effect the right specified in a contract. American Option Call Over Options On Futures Early Exercise Exercise Price Put Call On A Call Call Option Aggregate Exercise Price. Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator. Work With Investopedia About Us Advertise With Us Write For Us Contact Us Careers. Get Free Newsletters Newsletters. All Rights Reserved Terms Of Use Privacy Policy.
What is INCENTIVE STOCK OPTION? What does INCENTIVE STOCK OPTION mean?
What is INCENTIVE STOCK OPTION? What does INCENTIVE STOCK OPTION mean?
By the time most teens reach senior high school, nearly all will have faced a choice about whether or not to take a drink.
This very issue came up while teaching one of my online classes at Rutgers University last week.
It is nearly Christmas, and the tensions are high after a second bombing occurs, killing a workman at the site.
Someone a while back on this list posted with the same problem on a Warrior.