The buyer of an option pays the seller of the option a premium on the day that the agreement is entered into. •The Strike Price or the Exercise Price The pre-specified price is referred to as the strike or the exercise price. •Expiration The amount of time specified in the options contract. •Exercise The option buyer elects to utilize his/her right. •In the case of a call option, the buyer utilizes his/her right to buy the stock. •In the case of a put option, the buyer utilizes her/his right to sell the stock.