A. It is made through the OCC.

B. It must be executed by 4:30 p.m. CT the day before the expiration date.

C. It is not executed if the option expires.

D. It is determined on a random or FIFO basis.

Correct answer: D

This is true of assignment, not exercise notice.

  1. When holding an option through expiration date, are you automatically paid any profits, ...

    Holding an option through the expiration date without selling does not automatically guarantee you profits, but it might ... Read Answer >>
  2. A Straddle

    A. Speculates on the rate of change of a security's market price. B. Speculates on the rate of change of an option's market ... Read Answer >>
  3. Can an option be exercised on the expiration date?

    The use of options has increased dramatically over the years as a way to profit from or hedge against the volatile movements ... Read Answer >>
  4. How do I change my strike price once the trade has been placed already?

    Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >>
  5. What are the disadvantages of the FIFO accounting method?

    Learn how the FIFO accounting method differs from the LIFO method and the primary disadvantages for a company using the FIFO ... Read Answer >>
Related Articles
  1. Trading

    American Vs. European Options

    These two options have many similar characteristics, but it's the differences that are important.
  2. Trading

    4 Reasons To Hold Onto An Option

    There are times when an investor shouldn't exercise an option. Find out when to hold and when to fold.
  3. Trading

    Getting Acquainted With Options Trading

    Learn more about stock options, including some basic terminology and the source of profits.
  4. Trading

    Income Strategies for Your Portfolio to Make Money Regularly

    Discover the option-writing strategies that can deliver consistent income, including the use of put options instead of limit orders, and maximizing premiums.
  5. Managing Wealth

    Get The Most Out Of Employee Stock Options

    These plans can be lucrative for employees - if they know how to avoid unnecessary taxes.
  6. Trading

    Three Ways to Profit Using Put Options

    A brief overview of how to profit from using put options in your portfolio.
  7. Trading

    What Drives An Option's Price?

    The primary drivers of an option’s price are the underlying stock’s current price, the option’s intrinsic value, its time to expiration and volatility.
  8. Investing

    American Vs. European Options—Key Differences

    There are four key differences between American- and European-style options.
  9. Trading

    How to Trade Options on Government Bonds

    A look at trading options on debt instruments, like U.S. Treasury bonds and other government securities.
  1. Early Exercise

    The exercise of an option prior to its expiration date. Early ...
  2. Call On A Call

    A type of compound option in which the investor has the right ...
  3. Expiration Time

    A specified time, after which the options contract is no longer ...
  4. American Option

    An option that can be exercised anytime during its life. American ...
  5. Expiration Date (Derivatives)

    The last day that an options or futures contract is valid. When ...
  6. Call Over

    When the buyer of a call option exercises the option. In options ...
Hot Definitions
  1. Federal Debt

    The total amount of money that the United States federal government owes to creditors. The government's creditors include ...
  2. Passive Management

    A style of management associated with mutual and exchange-traded funds (ETF) where a fund's portfolio mirrors a market index. ...
  3. Series 7

    A general securities registered representative license administered by the Financial Industry Regulatory Authority (FINRA) ...
  4. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  5. Expatriation Tax

    An expatriation tax is a tax on someone who renounces their citizenship. In the United States, the expatriation tax provisions ...
  6. Earnings Stripping

    Earnings Stripping is a commonly-used tactic by multinationals to escape high domestic taxation by using interest deductions ...
Trading Center