I disagree with dr. rassman.
Everyone would agree that they were call options (no company in the world will motivate their managers by giving them put options which would mean that the manager would make money if the company performance was going down).
Here’s what wikipedia says:
The owner of an option contract may exercise it, indicating that the financial transaction specified by the contract is to be enacted immediately between the two parties, and the contract itself is terminated. When exercising a call, the owner of the option purchases the underlier at the strike price from the option seller, …
Pretty much all companies give their managers options with physical settlement. It bounds them better to the company.
Here’s once again wikipedia:
Physical settlement - Physically-settled options require the actual delivery of the underlying security. Examples of physically settled contracts include U.S.-listed exchange-traded equity options.
Cash settlement - Cash-settled options do not require the actual delivery of the underlier. Instead, the corresponding cash value of the underlier is netted against the strike amount and the difference is paid to the owner of the option. Examples of cash-settled contracts include most U.S.-listed exchange-traded index options.
In none of the cases the share was sold. Also because it is european option, the option could be exercised at the end of it’s validity. So the conclusion is that if he didn’t do it, it would be just a piece of paper. And he could not do it before the end date. This is a difference between us and eu options.
For all these reasons dr. rassman is wrong this time. There are two possibilities, he received shares or he received cash. and in none of them it would mean anything about march. He pretty much had to do it at that date or turn the options into nothing.