For participants in employee stock option plans: Using your stock option to buy shares of company stock at a set price. Several types of exercise methods are available.

For clients with futures and options: An option must be exercised if the option holder wants to buy (in the case of a call) or sell (in the case of a put) the underlying security at the exercise price or, in the case of a cash-settled option, to receive the cash settlement amount. In order to exercise most options, option holders must give their broker exercise instructions meeting the firm's procedures prior to the firm's exercise cut-off time. Option sellers must be aware of this exercise risk when the option they sold goes deep into the money, and option sellers must make sure they have the capital available to cover any such potential exercise.