When you buy an option can you excercise the option before the expiration date?

Question

Example: If I bought an option with a strike price of $10 and it expires in jan, and it goes to 20 and is heading back down, could I excercise it at the beginning of Dec or do I have to wait till it expires in January?

Like can you excercise it one week after you bought the stock?

Like can you excercise it one week after you bought the option?
?

Answer 1

Yes. Most options can be exercised before expiration. However, in many cases, it might be more advantageous to sell your option instead of exercising it, because they'll usually have a "time" premium still baked into the price of the option that you lose when you exercise the option.

For example, the AAPL Dec $80 call is currently 4.70. The stock is $82.45 as of close on Wed.

You can exercise the option and buy the stock for $80, thus netting $2.45 ($82.45-$80), or you can sell the option and receive $4.70. It's your choice!

Hope that helps!

Answer 2

Any option, whether an American or European style option, can be sold at any time. When it comes to exercising options, American can be exercised anytime while European can only be exercised at the end of the options life. Yes, most options traders do not hold the option till expiration unless their writers. Most buyers will sell the option prior to expiration. Why? Because 80%-90% of options expire worthless, so buyers lock in profits when the options rise in value. Writers on the other hand make money on the premium received and the decay of the premium and want the option to expire worthless. So, now that I've written a complete disseration, the simple answer is yes, you can sell an option any time prior to expiration.

Answer 3

You can exercise a normal stock option contract anytime prior to its expiration.

Answer 4

American options, yes. European options, no.