How To Exercise A Call Option

  1. To own the stock. If you are bullish and you own calls on the underlying stock, you may want to exercise the options contract to own the stock. Presumably, the stock price has risen and you can lock in a profit.
  2. To get the dividend. The time value may be less than the dividend payable to the owner of the underlying security.
  3. To help offset a short/long position. You might use options to offset losses from an existing position.

Note that there would be fees and commissions charged to you and closing out an options position triggers a taxable event, so consider the tax implications.

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Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are ...

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