Why Might an Investor Choose to Exercise a Deep-in-the-Money Option Early Instead of Selling It? ⎊ Path

Why Might an Investor Choose to Exercise a Deep-in-the-Money Option Early Instead of Selling It?

An investor might choose early exercise to immediately acquire the underlying asset for strategic reasons, such as gaining voting rights or qualifying for an airdrop, or to avoid transaction costs and slippage associated with selling the option and then buying the underlying. In rare cases, the market for the option might be illiquid.

Why Might an Investor Choose to Exercise an American-Style Call Option Early?

What Is the Primary Reason an Investor Might Choose an American-Style Option over a European-Style Option?

Why Might a Whale Choose to Execute a Trade ‘Off-Exchange’ or Over-the-Counter (OTC)?

What Is the Primary Reason a Trader Would Choose to Roll a Contract Instead of Closing the Position Entirely?

Why Might an Institutional Trader Prefer a Physically Settled Crypto Derivative?

Why Is Early Exercise Generally Not Optimal for an American Call Option on a Non-Dividend-Paying Asset?

How Does the Concept of ‘Carrying Costs’ Affect the Early Exercise Decision for a Call Option?

Why Is Early Exercise of a Deep ITM Call Option Often Not Optimal?

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.

Gaining Voting Rights

Governance ⎊ Acquiring voting rights within cryptocurrency, options, and derivatives contexts signifies participation in the decision-making processes governing protocols, exchanges, or underlying assets.