Option holders have the right to exercise their power at any time before the expiry date of the option
- If you hold a call option of X stock that expires at $10 in December, you can buy 100 shares of X stock for $10 at any time before December
When the option holder decides to exercise, the option seller will be assigned to buy/sell the stock, and the seller cannot buy the option from the market to avoid being assigned at that time
- For example, if you sell a call option of X stock that expires at $10 in December, the buyer decides to exercise, and the seller needs to sell 100 shares of X stock to the buyer at a price of $10
In-the-money options at expiration usually lead to automatic exercise.