What Is The Options Exercise Price?

In the case of a physical delivery option, the exercise price (which is sometimes called the “strike price”) is the price at which the option holder has the right either to purchase or to sell the underlying interest.

EXAMPLE: A physical delivery XYZ 40 call option gives the option holder the right to purchase 100 shares of XYZ stock at an exercise price of $40 a share. A physical delivery XYZ 40 put option gives the option holder the right to sell 100 shares of XYZ common stock at an exercise price of $40 a share.

Similar Posts

  • What Is Options Adjustment?

    Adjustments may be made to some of the standardized terms of outstanding options upon the occurrence of certain events related to the underlying security. The determination of whether to adjust outstanding options in response to a particular event, and, if so, what the adjustment should be, is made by OCC, taking into consideration policies established…

  • Who is an Option Holder?

    The holder of a physical delivery XYZ call option has the right to purchase shares of XYZ Corporation stock at the specified exercise price upon exercise prior to the expiration of the option. The holder of a physical delivery XYZ put option has the right to sell shares of XYZ Corporation at the specified exercise…

  • Calendar Spread

    A Calendar spread is when you sell an option and buy another one with a more distant expiration date. This can be created with either puts or calls. For example, let’s say you wanted to play Netflix with calendar spread because you figure that the stock has dropped too far too quickly and will bounce…

  • Options Exercise

    This is the process of carrying out the terms of an options contract. A call buyer can exercise his or her right to buy the stock at the strike price. A put owner can exercise his or her right to sell the contract. See also: Exercise Price, Exercise Settlement Value, Automatic Exercise

Leave a Reply