Is it better to exercise an option or sell it?
Often it is more profitable to sell the option than to exercise it if it still has time value. If an option is in the money and close to expiring, it may be a good idea to exercise it. Options that are out-of-the-money don’t have any intrinsic value, they only have time value.
What if strike price is lower than current price?
So when the strike price is below the stock’s price in the market, you are able to buy the stock at a price lower than what you would have paid if you bought it on the stock exchange. This signifies that the option has some intrinsic value, and you would likely exercise the option.
What happens if option hits strike price?
When the stock price equals the strike price, the option contract has zero intrinsic value and is at the money. Therefore, there is really no reason to exercise the contract when it can be bought in the market for the same price. The option contract is not exercised and expires worthless.