Exercise Limit

DEFINITION of 'Exercise Limit'

A restriction on the amount of option contracts of a single class that any one person or company can exercise within a fixed time period (usually a period of five business days). This limit is in place so that no one person or company can corner or greatly impact the option market.

BREAKING DOWN 'Exercise Limit'

For example, copper options on the CBOE may have a five-day exercise limit of 5,000 contracts, meaning no person or group can trade more than 5,000 copper contracts over any five-day period.

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RELATED FAQS
  1. After exercising a put option, can I still hold my option contract in order to sell ...

    Once a put option contract has been exercised, that contract does not exist anymore. A put option grants you the right to ... Read Answer >>
  2. How do I change my strike price once the trade has been placed already?

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  3. Does the seller (the writer) of an option determine the details of the option contract?

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  4. What is the difference between open interest and volume?

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  6. How is a put option exercised?

    A put option is a contract that gives the option holder the right, but not obligation, to sell a set amount of shares (1 ... Read Answer >>
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