Common use of Exercising Options Clause in Contracts

Exercising Options. An option may have an American-style exercise or European-style exercise regardless of where the recognized market is located. An American-style option can be exercised by the purchaser at any time before the expiration. To do this, the purchaser notifies the dealer where the option was purchased. A purchaser should determine in advance from his dealer the latest date notice may be given to his/ her dealer. A European-style option may only be exercised by the purchaser on a specified date. Upon assignment, the seller must make delivery of (in the case of a call) or take delivery of and pay for (in the case of a put) the underlying interest. In the case of a cash delivery option, the seller must, in lieu of delivery, pay the positive difference between the aggregate exercise price and the settlement value of the underlying interest (in the case of both a call and a put). A purchaser of an option which expires loses the premium paid for the option and his transaction costs. The seller of an option which expires will realize as his gain the premium received for the option less his transaction costs.

Exercising Options. An option may have an American-style exercise or European-style exercise regardless of where the recognized market is locatedlocated . An American-style option can be exercised by the purchaser at any time before the expirationexpiration . To do this, the purchaser notifies the dealer where the option was purchasedpurchased . A purchaser should determine in advance from his dealer the latest date notice may be given to his/ her dealerdealer . A European-style option may only be exercised by the purchaser on a specified datedate . Upon assignment, the seller must make delivery of (in the case of a call) or take delivery of and pay for (in the case of a put) the underlying interestinterest . In the case of a cash delivery option, the seller must, in lieu of delivery, pay the positive difference between the aggregate exercise price and the settlement value of the underlying interest (in the case of both a call and a put)) . A purchaser of an option which expires loses the premium paid for the option and his transaction costscosts . The seller of an option which expires will realize as his gain the premium received for the option less his transaction costscosts .