Early exercise of options Early exercise of American calls for dividends This page sets out some typical rules which are employed in the early exercise of an option. However this is not to be construed as advice in any specific case, and you should seek your own independent advice before making any decisions. Summary The following table sets out the rule of thumb for when an American call option is likely to be exercised ahead of expiry, before the stock goes ex-dividend. Call option Put option (same strike) Exercise likely when In-the-money zero value dividend &gt; interest expense of buying shares early In-the-money value &gt; 0 dividend &gt; put price + interest expense of buying shares early Where a call option is deep-in-the-money, with little chance of the stock falling below the strike price before expiry, the option is a candidate for early exercise. This generally occurs where the dividend the investor would receive, if they were to exercise the call, is greater than the interest expense incurred in buying the shares which are the subject of the option ahead of the expiry date. Generally this only occurs on the day before the ex-dividend date. For in-the-money calls where the corresponding put still has some value, the rule used by most of the market is that if the value of the dividend is more than the value of the corresponding put plus interest, then the call should generally be exercised for the dividend. Writers of call options who want to