Derivatives
Exercise
Definition
What is Exercise?
The use of an option holder's contractual right to buy or sell the underlying asset.
Example in practice
How This Looks in Practice
The investor exercises a call and buys shares at the strike price.
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Related Terms
Derivatives
Derivative
A contract whose value depends on an underlying asset, rate, index, or event.
DerivativesUnderlying Asset
The asset, rate, index, or reference on which a derivative's value is based.
DerivativesNotional Amount
The reference amount used to calculate derivative payments, which may exceed the cash initially exchanged.
Derivatives StrategiesCovered Call
A strategy that owns the underlying asset and sells call options against it.