The owner of an option contract has the right to exercise it, and thus require that the financial transaction specified by the contract is to be carried out immediately between the two parties, whereupon the option contract is terminated. When exercising a call option, the owner of the option purchases the underlying shares (or commodities, fixed interest securities, etc.) at the strike price from the option seller, while for a put option, the owner of the option sells the underlying to the option seller, again at the strike price.
Other articles related to "exercise, options":
... for the convenience of brokers, who would otherwise have to request exerciseof all in the money options the OptionsClearing Corporation will automatically exerciseany option that is set to expire in the ... This is called "exerciseby exception" ... A broker or holder of such optionsmay request that they not be exercised by exception ...
Famous quotes containing the word exercise:
“I have never taken any exercise, except sleeping and resting, and I never intend to take any. Exercise is loathsome. And it cannot be any benefit when you are tired; and I was always tired.”
—Mark Twain [Samuel Langhorne Clemens] (18351910)