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- Most option traders actually dont wanna exercise their contract. When you choose to exercise your in-the-money option, you forfeit that extrinsic amount. You literally give it away. Like take some money out of your wallet, flush it down the toilet because thats what youre doing when youre exercising the options. (upbeat music) - Hey, Im Desiree. - Im Denver. - Right, we should switch. - Yep, yep, okay. - Welcome to Options Trading essentials, a video series dedicated to teaching you the ins and outs of options trading. Now that weve got our foundation in place for options pricing, its time to revisit the topic of options expiration and discuss exercise and assignment. - This is a big one. Even if you dont plan on holding an option into expiration, youve got to understand the mechanics of how expiration works. - Exactly. All options expire. And if you trade them long enough youll eventually run into a scenario where you either have to exercise an option on your own- - Or if