Understanding Option Exercise – Don’t Be Caught Off Guard

Exercising an option sounds simple — but if you’re not ready, it can cause serious problems.

In this lesson, we covered:

• The meaning of exercising calls and puts
  
• The difference between early and automatic exercise
  
• Real-life examples of how exercising works
  
• The capital requirements and timing considerations
  
• How to avoid unnecessary risks near expiration
  

Whether you plan to exercise or not, you need to understand how it works — because the market doesn’t wait for you to figure it out.