Options / Contract reference
Options Contract Terms: Strike, Multiplier, Exercise, and Expiration
An options contract identifies the underlying, call or put, strike price, expiration, and contract deliverable. Check the contract specifications because the multiplier and deliverable can change, and exercise or assignment can create an obligation to buy or sell the underlying.
What does a call or put give its holder?
A call gives its holder the right to buy the underlying asset at the strike price under the contract terms. A put gives its holder the right to sell it at the strike price. The option writer (seller) takes on the corresponding obligation if assigned. Buying an option and writing one therefore have different rights and obligations. A buyer can also close a position by selling the option rather than exercising it.
What is the strike price?
The strike, also called the exercise price, is the price at which the option holder may buy the underlying with a call or sell it with a put when exercising. It is a contract term, not the option premium and not a prediction of where the underlying will trade. Our options breakeven calculator uses strike and premium to estimate a long option's simplified expiration breakeven.
What are premium and multiplier?
The premium is the option's quoted price. For a standard equity option quoted per share, the contract value is commonly the quoted premium multiplied by 100 shares per contract. That familiar multiplier is not universal: corporate actions can adjust terms and deliverables. The Options Industry Council gives an example of an adjusted option covering 150 shares, where a quoted premium of 4 corresponds to $600. Read the actual contract deliverable and multiplier before estimating total cost or payoff.
Our options profit and loss calculator and covered call calculator let you enter the multiplier. They apply it as a simplified share count; unusual deliverables can include cash or other terms that a single multiplier cannot describe.
What do expiration and exercise style mean?
The expiration date is when the option right ends under the contract. The last trading day can differ from the expiration date, particularly for some index products or when a scheduled trading day is affected by a holiday. American-style describes an option that may be exercised before expiration, while European-style generally limits exercise to a specified period at expiration. Exercise style does not by itself prevent a holder from closing a position by trading it before expiration. Check the product specifications and broker deadlines; broker exercise cutoffs can be earlier than an exchange deadline.
What is assignment?
Exercise is the holder's action to use the option right. Assignment is the process by which an option writer is selected to fulfill the contract after a holder exercises. A short call writer may have to deliver the underlying at the strike; a short put writer may have to buy it. Assignment can happen before expiration for contracts that permit early exercise. A short option position is not simply “exercised” by its writer.
What should I verify before using a calculator?
- Underlying symbol and whether the contract is a call or put.
- Buy (long) or write (short) position, strike, and contract expiration.
- Premium quote convention, contract multiplier, deliverable, and settlement method.
- Exercise style, last trading day, exercise cutoff, and any adjusted terms.
These terms explain contract mechanics; they do not determine whether an option is suitable or predict its outcome. Calculator pages on this site model selected inputs and may omit product-specific settlement, assignment, fees, taxes, and broker rules.
Frequently asked questions
Does one listed option contract always represent 100 shares?
No. Many standard equity options use a 100-share multiplier, but adjustments can change the multiplier or deliverable. Verify the actual contract terms.
Is the strike the price I paid for an option?
No. The strike is the contract price for buying or selling the underlying upon exercise. The premium is the price paid or received to trade the option.
Can an option be traded after its last trading day?
Generally, no. The last trading day and expiration date depend on the product. Consult the exchange specifications and your broker rather than assuming every option follows the same calendar.
Does a short option holder choose whether to exercise?
No. The option holder has the exercise right; the writer may be assigned and then must meet the contract obligation.
Primary sources checked 2026-11-03: Options Industry Council (OIC), Options Glossary (including “Adjustments,” “Exercise price,” “Expiration date,” and “Assignment”); OIC, Options Basics; and OIC, Options Exercise. Contract terms and deadlines vary by product and broker.