# Early Exercise

*Derivatives & Options — Finicade finance glossary*

Exercising an American option before expiry. It's usually a mistake — you throw away remaining time value — but can pay off, for instance to capture a dividend on a call or free up cash on a deep put.

**Also known as:** optimal exercise

**Related terms:** [American Option](https://finicade.com/glossary/american-options), [Time Value](https://finicade.com/glossary/time-value), [Option](https://finicade.com/glossary/option)

**Taught in:** Hull Street — Put–Call Parity & Bounds

Source: https://finicade.com/glossary/early-exercise