What does option exercise mean? Option exercise means that the obligee in option contracts requires the obligor to perform the obligations stipulated in the option according to the agreed time, price and method.
There are two kinds of exercise options: automatic exercise and active exercise. Automatic exercise refers to the automatic exercise when the option contract expires without the initiative of the option buyer. Active exercise means that the option buyer can decide whether to exercise within the time limit stipulated in the contract.
How to exercise options? Investors should make a comprehensive analysis of the market situation. The market trend, volatility and price changes of related assets will have an impact on the decision-making of option exercise. Investors can evaluate the market trends and trends, as well as the potential risks and benefits of related assets through technical analysis and basic analysis. In addition, investors should also pay attention to market liquidity and trading volume to ensure smooth trading when exercising their rights.
How to determine the exercise price of options? There are generally three methods to determine the exercise price of stock options: one is the present value advantage method, that is, the exercise price is lower than the current share price; The second is the equal present value method, that is, the exercise price is equal to the current market price; The third is the present value disadvantage method, that is, the exercise price is higher than the current stock price.
When trading stock options, it is usually realized through the option trading contract between the buyer and the seller, which is a unified standard contract and stipulates the necessary conditions for trading, such as validity, quantity, type, cost, stock price and other factors.
Option exercise skill puts the option holder in the exercise state and locks the selling price of the securities, and the right holder has the right to sell the securities at the exercise price on the exercise day. When the exercise price of the option is higher than the market price of the securities and the actual value of the contract means that the obligee can sell the securities at a price higher than the current price of the securities and make a profit, in this case, the exercise can be considered.
If you don't intend to exercise your rights, you can also consider selling and closing the position to reduce the investment cost or lock in the income you have already obtained on the premise that the equity fee obtained from closing the position can cover the closing commission.