Beginning Traders

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Exercise

To execute the right of the holder of an option to buy (for call options) or sell (for put options) the underlying security at the striking price.

American Style vs European Style

American style options can be exercised anytime before the expiration date. European style options on the other hand can only be exercised on the expiration date itself. Currently, all of the stock options traded in the marketplaces are American-Style options.

When an option is exercised by the option holder (the option buyer), the option writer (option seller) will be assigned the obligation to deliver the terms of the options contract.

Next: Assignment


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