If the option is exercised, the buyer has elected to exercise their rights to buy or sell the stock depending on the type of option involved. Exercising an option obligates the seller to perform under the contract.


Most individual investors will elect to sell their rights to another investor rather than exercise their rights. The investor who buys the option from them will acquire all the rights of the original purchaser.


If the option expires, the buyer has elected not to exercise their right and the seller of the option is relieved of their obligation to perform.

Exercise Price

The exercise price is the price at which an option buyer may buy or sell the underlying stock depending on the type of option involved in the transaction. The exercise price is also known as the strike price.

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Characteristics Of All Options

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