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Definition of Exercise
To implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of
The price at which the underlying future or options contract may be bought or sold.
The price set for buying an asset (call) or selling an asset (put).
The amount of advantage over a current market transaction provided by an in-the-money
An option that may be exercised at any time up to and including the expiration date.
An option that can be exercised any time until its
An option contract that can be exercised at any time between the date of purchase and
The receipt of an exercise notice by an options writer that requires the writer to sell (in the case
A model for pricing call options based on arbitrage arguments that uses
To exercise a call option.
Right to buy an asset at a specified exercise price on or before the exercise date.
A eurobond that can be converted into another asset, often through exercise of
A short call option position in which the writer owns the number of shares of the underlying
A put option position in which the option writer also is short the corresponding stock or has
Accounts over which an individual or organization, other than the person in whose
Option that may be exercised only at the expiration date. Related: american option.
An option that can be exercised only on its expiration date.
An option contract that can only be exercised on the expiration date.
The last day (in the case of American-style) or the only day (in the case of European-style)
Use of a firm's call option on a callable convertible bond when the firm knows that the
Fully diluted earnings per shares
Earnings per share expressed as if all outstanding convertible securities
Heavenly Parachute Stock Option
A nonqualified stock option that allows a deceased option holder’s estate up to three years in which to exercise his or her
The simultaneous purchase and sale of two options that differ only in their exercise date.
The expected volatility in a stock's return derived from its option price, maturity date,
Incentive Stock Option
An option to purchase company stock that is not taxable
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
Nonqualified Stock Option
A stock option not given any favorable tax treatment
The day the option is either exercised or expires.
A right to buy or sell specific securities or commodities at a stated
A contract that, in exchange for the option price, gives the option buyer the right, but not
An option to sell a stipulated amount of stock or securities within a
Put an option
To exercise a put option.
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
Right to sell an asset at a specified exercise price on or before the exercise date.
The price at which the asset will be sold if a put option is exercised. Also called the strike or
Issuance of "rights" to current shareholders allowing them to purchase additional shares,
Section 83(b) Election
The decision by an employee to recognize taxable income
Options: All option contracts of the same class that also have the same unit of trade, expiration date,
For options, a combination of call or put options on the same stock
A strategy used in trading options or futures. It involves
exercise a put or call option.
The stated price per share for which underlying stock may be purchased (in the case of a call) or
See exercise price.
Options on interest rate swaps. The buyer of a swaption has the right to enter into an interest rate
A fee paid to an underwriter in connection with an underwritten rights offering or an
Also called time value, the amount by which the option price exceeds its intrinsic value. The
A short call option position in which the writer does not own shares of underlying stock
A short put option position in which the writer does not have a corresponding short stock
Options: the security subject to being purchased or sold upon exercise of an option
Simultaneous purchase and sale of two options that differ only in their exercise price. See:
The seller of an option, usually an individual, bank, or company, that issues the option and
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