An option holder is an individual or entity that has purchased an option. Depending upon the type of option, the option holder may be able to exercise the option contract at any time prior to expiration, if it is an American option, or on the expiration date, if a European option. An option holder can also sell the option. If the option holder has a call option, exercising the option means electing to buy the underlying asset for the strike price. If the option holder owns a put option, exercising the option means electing to sell the underlying asset for the strike price. An option holder has less risk than an option writer. The greatest loss an option holder can experience on the option is that it will expire worthless. |
