You're here:  Home --> Dictionary --> E --> Exercise

Option
In the Money
Strike Price
Out of the Money

Exercise
Term category: Derivatives
In 10 words or less:  An action taken by an investor to convert options into shares of stock.

Definition: When you exercise an option, you are converting it into shares of stock.

StockJargon Advice: Let's say you had one contract of call options on Microsoft with a strike price of $20 per share.  If the stock was at $25, you could exercise your option to buy the stock at $20 per share and have an immediate profit of $500 (100 shares x $5 per share).

Related Articles

Options and Put-Call Parity
This article will help to explain what options are and how people use them for hedging/speculating...

Commodity Trading
Commodity trading can be quite risky but it is an alternative to stocks and bonds…

Foreign Exchange Markets
Investing in the foreign exchange market has its own benefits and disadvantages, as this article discusses…

Related Books

Stock Options for Dummies by Alan R. Simon
Professional Stock Trading by Mark Conway
My Life as a Quant by Emanuel Derman
Buying Bonds on Margin By Business Publication Corp.

# -A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z