The act of an option buyer using their right to buy or sell the underlying asset at the strike price.
Exercising an option means the buyer chooses to invoke their contractual right — to buy the underlying at the strike price for a call, or sell it at the strike price for a put. In-the-money options are typically auto-exercised on expiry unless the holder opts out. Exercise triggers a corresponding assignment obligation on the option seller, and depending on the contract, results in either physical delivery of the underlying or a cash settlement.
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