Definition
The term aggregate exercise price refers to the strike price of an option multiplied by the number of securities in the contract. The aggregate exercise price does not consider any premium paid, or received, on the option.
Calculation
Aggregate Exercise Price = Strike Price of Option x Contract Size
Note: There are 100 shares of stock in a typical option contract.
Explanation
The aggregate exercise price tells the investor how much money is paid, or received, if the shares are purchased or sold. For example, if an employee of Company ABC is awarded stock options that allow her to receive 1,000 shares of stock at $10.00 per share, the aggregate exercise price of this option is 1,000 x $10.00, or $10,000. The aggregate exercise price calculation does not take into consideration premiums paid, or received, on the option.
The aggregate exercise price of a debt instrument is determined by taking the exercise price of the option and multiplying it by the face value of the underlying security (bond).
Related Terms
The term exercise price refers to the price at which an option contract's securities may be sold or purchased. If the call or put option is "in-the-money," the difference between the exercise price and the market price of the underlying security is the potential profit gained per share.
Moneyzine EditorJanuary 17th, 2024
