Exercise (options)
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.
Read more about Exercise (options): Exercise Type, Settlement Type, Exercise Considerations, Assignment and Clearing, Exercise By Exception
Famous quotes containing the word exercise:
“I talk democracy to these men and women. I tell them that they have the vote, and that theirs is the kingdom and the power and the glory. I say to them “You are supreme: exercise your power.” They say, “That’s right: tell us what to do;” and I tell them. I say “Exercise your vote intelligently by voting for me.” And they do. That’s democracy; and a splendid thing it is too for putting the right men in the right place.”
—George Bernard Shaw (1856–1950)