Understanding Exercisability in Options Trading

Exercisable refers to the ability of an option holder to exercise their options and purchase the underlying asset at a specified price (strike price) within a specified time frame. The term is commonly used in the context of stock options, where employees or other parties may be granted options to purchase company shares at a certain price over a specific period of time.

For example, if an employee is granted 100 options with a strike price of $50 and the option is exercisable for three years, they have the right to purchase 100 shares of the company's stock at $50 per share anytime within the next three years. If the current market price of the stock is higher than the strike price, the option holder may choose to exercise their options and purchase the stock at the lower strike price, potentially saving money on the purchase.

Exercisability can be an important factor in determining the value of options and the potential gains or losses that may be realized by exercising them. It is typically subject to certain conditions and limitations, such as vesting requirements and expiration dates, which can affect the ability to exercise the options and the potential benefits of doing so.