Exercise

The act of an options holder invoking the right specified in the contract -- buying the underlying asset (for a call) or selling it (for a put) at the strike price. American-style options can be exercised any time before expiration, while European-style options can only be exercised at expiration. Most options traders close their positions before expiration rather than exercise, but early exercise can make sense for deep in-the-money calls on stocks about to pay a dividend.