An option notice which is also known as option assignment is a legal document or agreement sent by the original owner of options to the new owner in order to confirm that the new owner now has the authority to exercise the options i.e. sell or trade.
Introduction to the Exercise of Option Notice:
When a person buys options of shares and stocks from another person, both the seller and buyer sign an agreement known as the option agreement. In this agreement, the new buyer has the right to sell or trade the options but not the obligation and he can only trade the options when it’s appropriate time defined in the agreement. As soon the new buyer has the right to sell or trade the options and the permission is allowed by the original or previous owner, the previous owner sends a notice to the new buyer in order to inform him that he can now exercise the options i.e. sell or trade. This notice is known as the exercise of options notice.
Brief Description of the Exercise of Option Notice:
The ownership of a person on stocks and shares is defined by the agreement which is the legal document showing that a particular person has the ownership rights on shares and stocks. When a person buys options from another person, they sign the agreement. Many things are included in the option agreement but the most important element is the time and price on which the new buyer has the right to sell or trade the options. This time and market value of options is included in the option agreement by both parties and the new buyer is obligated to respect the clauses added in the agreement. As soon the options hit a certain price explained in the agreement, the previous owner has the legal obligation to inform the new owner that now he can trade the options or exercise the option which means if he wants, he can sell the options to another person. This exercise of options notice is sent to the new owner by the previous owner in order to inform him that the options are expired now and he has the right to sell them.
Key elements to include in the Exercise of Option Notice:
- Name of the previous owner of the options with complete address
- Name of the new owner of the options with complete address
- Details of the options transferred to the new owner
- Reference to the option agreement signed by both parties
- Date when the option agreement was signed between the previous and new owner
- Date when the notice is being sent to the new owner
- Precise statement that now the new owner can exercise the options according to the option agreement
- Obligations of both the previous and new owners of the options
- Validation and termination of the notice to exercise the options
- Signature of the previous owner
Here is a preview of a Free Sample Exercise of Option Notice created as a fillable PDF Form,
Here is the download link for this Exercise of Option Notice,
