How Does Being ITM Affect the Likelihood of an Option Being Exercised? ⎊ Path

How Does Being ITM Affect the Likelihood of an Option Being Exercised?

An option being in-the-money (ITM) significantly increases the likelihood of it being exercised, especially as the expiration date approaches, because it has a positive intrinsic value and is profitable to exercise. However, American-style options are often not exercised early unless there are special circumstances, as early exercise forfeits the remaining time value.

European options can only be exercised at expiration.

How Does Early Exercise Affect the Pricing Model for American Options?

What Is the Impact of Early Exercise on the Time Value of an American Call Option?

How Does the Potential for Early Exercise Affect the Time Value of an American Option?

What Is the Concept of “Early Exercise” for an American Option?

Does the Early Exercise Feature of American Options Increase or Decrease the Premium, and Why?

How Does the Dividend Yield of the Underlying Asset Affect the Value of an American Option?

What Is the Difference between an American and European Option regarding Early Exercise and Risk?

Does the Time Remaining until Expiration Make Early Exercise of an In-the-Money Put More or Less Likely?

Glossar

Early Exercise

Trigger ⎊ Early exercise, within cryptocurrency options and financial derivatives, denotes the right ⎊ but not the obligation ⎊ of the option holder to realize the intrinsic value of the contract prior to its scheduled expiration date.