What does it mean to exercise a stock option?

Exercising a stock option means purchasing the shares of stock per the stock option agreement. The benefit of the option to the option holder comes when the grant price is lower than the market value of the stock at the time the option is exercised. Here’s an example:

What happens if I exercise my stock options?

If you decide to exercise your stock options, you’ll own a piece of the company. Owning stock options is not the same as owning shares outright. Stock options are the right to buy shares of company stock at a fixed price defined in your option grant (also known as the strike price, exercise price, or grant price).

Can I exercise stock options online?

If you have stock options in a plan that is administered by Fidelity, you can view, model or exercise options online. Exercise stock option means purchasing the issuer's common stock at the price set by the option, regardless of the stock's price at the time you exercise the option.You can do cash or cashless excerise of your stock options.