Can the purchaser of a stock call option cancel the contract?
You bought the right – but not the obligation – to buy a certain number of shares at $15 from  whomsoever sold you the option, and you paid a premium for it.  You can choose whether you want to buy the shares at $15 during the period agreed upon. If you call for the shares, the other guy has to sell the shares to you for $15 each, even if the market price is higher. You can then turn around and promptly resell the purchased shares at the higher market price. If the market price never rises above $15 at any time while the option is open, you still have the right to buy the shares for $15 if you choose to do so. Most rational people would let the option expire without exercising it, but this is not a legal requirement.  Doing things like buying shares at $15 when the market price is below $15 is perfectly legal; just not very savvy.  You cannot cancel the option in the sense of going to the seller of the option and demanding your premium money back because you don't  intend to exercise the option because the market price is below $15.  Of course, if the market price is above $15 and you tell the seller to cancel the contract, they will be happy to do so, since it lets them off the hook. They may or may not give you the premium back in this case. "I'm adding to @Dilip's basic answer, to cover the additional points in your question.  I'll assume you are referring to publicly traded stock options, such as those found on the CBOE, and not an option contract entered into privately between two specific counterparties (e.g. as in an employer stock option plan). Since you are not obligated to exercise a call option you purchased on the market, you don't need to maintain funds on account for possible exercising.  You could instead let the option expire, or resell the option, neither of which requires funds available for purchase of the underlying shares. However, should you actually choose to exercise the call option (and usually this is done close to expiration, if at all), you will be required to fund your account much like if you bought the underlying shares in the first place.  Call your broker to determine the exact rules and timing for when they need the money for a call-option exercise. And to expand on the idea of ""cancelling"" an option you purchased: No, you cannot ""cancel"" an option contract, per se.  But, you are permitted to sell the call option to somebody else willing to buy, via the market.  When you sell your call option, you'll either make or lose money on the sale – depending on the price of the underlying shares at the time (are they in- or out- of the money?), volatility in the market, and remaining time value.  Once you sell, you're back to ""no position"".  That's not the same as ""cancelled"", but you are out of the trade, whether at profit or loss. Furthermore, the option writer (i.e. the seller who ""sold to open"" a position, in writing the call in the first place) is also not permitted to cancel the option he wrote.  However, the option writer is permitted to close out the original short position by simply buying back a matching call option on the market.  Again, this would occur at either profit or loss based on market prices at the time.  This second kind of buy order – i.e. made by someone who initially wrote a call option – is called a ""buy to close"", meaning the purchase of an offsetting position.  (The other kind of buy is the ""buy to open"".) Then, consider: Since an option buyer is free to re-sell the option purchased, and since an option writer (who ""sold to open"" the new contract) is also free to buy back an offsetting option, a process known as clearing is required to match remaining buyers exercising the call options held with the remaining option writers having open short positions for the contract.  For CBOE options, this clearing is performed by the Options Clearing Corporation.  Here's how it works (see here): What is the OCC? The Options Clearing Corporation is the sole issuer of all securities   options listed at the CBOE, four other U.S. stock exchanges and the   National Association of Securities Dealers, Inc. (NASD), and is the   entity through which all CBOE option transactions are ultimately   cleared. As the issuer of all options, OCC essentially takes the   opposite side of every option traded. Because OCC basically becomes   the buyer for every seller and the seller for every buyer, it allows   options traders to buy and sell in a secondary market without having   to find the original opposite party.   [...]   [emphasis above is mine] When a call option writer must deliver shares to a call option buyer exercising a call, it's called assignment.  (I have been assigned before, and it isn't pleasant to see a position called away that otherwise would have been very profitable if the call weren't written in the first place!) Also, re: ""I know my counter party cannot sell his shares"" ... that's not strictly true.  You are thinking of a covered call.  But, an option writer doesn't necessarily need to own the underlying shares.  Look up Naked call (Wikipedia).  Naked calls aren't frequently undertaken because a naked call ""is one of the riskiest options strategies because it carries unlimited risk"".  The average individual trader isn't usually permitted by their broker to enter such an order, but there are market participants who can do such a trade. Finally, you can learn more about options at The Options Industry Council (OIC)."
I have held an in the money long position on an option into expiration, on etrade, and nothing happened.   (Scalping expiring options - high risk) The option expired a penny or two ITM, and was not worth exercising, nor did I have the purchasing power to exercise it. (AAPL) From etrade's website: Here are a few things to keep in mind about exercises and assignments: Equity options $0.01 or more in the money will be automatically   exercised for you unless you instruct us not to exercise them. For   example, a September $25 call will be automatically exercised if the   underlying security's closing price is $25.01 or higher at expiration.   If the closing price is below $25.01, you would need to call an   E*TRADE Securities broker at 1-800-ETRADE-1 with specific instructions   for exercising the option. You would also need to call an E*TRADE   Securities broker if the closing price is higher than $25.01 at   expiration and you do not wish to exercise the call option. Index   options $0.01 or more in the money will be automatically exercised for   you unless you instruct us not to exercise them. Options that are out   of the money will expire worthless. You may request to exercise   American style options anytime prior to expiration. A request not to   exercise options may be made only on the last trading day prior to   expiration. If you'd like to exercise options or submit   do-not-exercise instructions, call an E*TRADE Securities broker at   1-800-ETRADE-1. You won't be charged our normal fee for   broker-assisted trades, but the regular options commission will apply.   Requests are processed on a best-efforts basis.  When equity options are exercised or assigned, you'll receive a Smart   Alert message letting you know. You can also check View Orders to see   which stock you bought or sold, the number of shares, and the strike   price.  Notes: If you do not have sufficient purchasing power in your account   to accept the assignment or exercise, your expiring options positions   may be closed, without notification, on the last trading day for the   specific options series. Additionally, if your expiring position is   not closed and you do not have sufficient purchasing power, E*TRADE   Securities may submit do-not-exercise instructions without   notification. Find out more about options expiration dates. There are a few situations in which it may be advantageous to exercise early. Wikipedia actually has a good explanation: Option Style, Difference in value To account for the American's higher value there must be some   situations in which it is optimal to exercise the American option   before the expiration date. This can arise in several ways, such as: An in the money (ITM) call option on a stock is often exercised just   before the stock pays a dividend that would lower its value by more   than the option's remaining time value.  A put option will usually be   exercised early if the underlying asset files for bankruptcy.[3]  A deep ITM currency option (FX option) where the strike currency has a   lower interest rate than the currency to be received will often be   exercised early because the time value sacrificed is less valuable   than the expected depreciation of the received currency against the   strike.  An American bond option on the dirty price of a bond (such as   some convertible bonds) may be exercised immediately if ITM and a   coupon is due.  A put option on gold will be exercised early when deep   ITM, because gold tends to hold its value whereas the currency used as   the strike is often expected to lose value through inflation if the   holder waits until final maturity to exercise the option (they will   almost certainly exercise a contract deep ITM, minimizing its time   value).[citation needed] "A covered call risks the disparity between the purchase price and the potential forced or ""called"" sale price less the premium received. So buy a stock for $10.00 believing it will drop you or not rise above $14.00 for a given period of days. You sell a call for a $1.00 agreeing to sell your stock for $14.00 and your wrong...the stock rises and at 14.00 or above during the option period  the person who paid you the $1.00 premium gets the stock for a net effective price of $15.00. You have a gain of 5$. Your hypothecated loss is unlimited in that the stock could go to $1mil a share. That loss is an opportunity loss you still had a modest profit in actual $. The naked call is a different beast. you get the 1.00 in commission to sell a stock you don't own but must pay for that right. so lets say you net .75 in commission per share after your sell the option. as long as the stock trades below $14.00 during the period of the option you sold your golden. It rises above the strike price you must now buy that stock at market to fill the order when the counter party choses to exercise the option which results in a REAL loss of 100% of the stocks market price less the .75 a share you made.   in the scenarios a 1000 shares that for up $30.00 a share over the strike price make you $5,000 in a covered call and lose you $29,250 in a naked call.Naked calls are speculative. Covered calls are strategic." "In general there are two types of futures contract, a put and call.  Both contract types have both common sides of a transaction, a buyer and a seller.  You can sell a put contract, or sell a call contract also; you're just taking the other side of the agreement.  If you're selling it would commonly be called a ""sell to open"" meaning you're opening your position by selling a contract which is different from simply selling an option that you currently own to close your position. A put contract gives the buyer the right to sell shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to put the shares on someone else.   A call contract gives the buyer the right to buy shares (or some asset/commodity) for a specified price on a specified date; the buyer of the contract gets to call on someone for shares. ""American"" options contracts allow the buyer can exercise their rights under the contract on or before the expiration date; while ""European"" type contracts can only be exercised on the expiration date. To address your example.  Typically for stock an option contract involves 100 shares of a stock.  The value of these contracts fluctuates the same way other assets do.  Typically retail investors don't actually exercise their contracts, they just close a profitable position before the exercise deadline, and let unprofitable positions expire worthless.  If you were to buy a single call contract with an exercise price of $100 with a maturity date of August 1 for $1 per share, the contract will have cost you $100.  Let's say on August 1 the underlying shares are now available for $110 per share.  You have two options: Option 1: On August 1, you can exercise your contract to buy 100 shares for $100 per share.  You would exercise for $10,000 ($100 times 100 shares), then sell the shares for $10 profit per share; less the cost of the contract and transaction costs. Option 2: Your contract is now worth something closer to $10 per share, up from $1 per share when you bought it.  You can just sell your contract without ever exercising it to someone with an account large enough to exercise and/or an actual desire to receive the asset or commodity." "This probably won't be a popular answer due to the many number of disadvantaged market participants out there but: Yes, it is possible to distort the markets for securities this way. But it is more useful to understand how this works for any market (since it is illegal in securities markets where company shares are involves).  Since you asked about the company Apple, you should be aware this is a form of market manipulation and is illegal... when dealing with securities. In any supply and demand market this is possible especially during periods when other market participants are not prevalent. Now the way to do this usually involves having multiple accounts you control, where you are acting as multiple market participants with different brokers etc. The most crafty ways to do with involve shell companies w/ brokerage accounts but this is usually to mask illegal behavior In the securities markets where there are consequences for manipulating the shares of securities. In other markets this is not necessary because there is no authority prohibiting this kind of trading behavior. Account B buys from Account A, account A buys from Account B, etc. The biggest issue is getting all of the accounts capitalized initially. The third issue is then actually being able to make a profit from doing this at all. Because eventually one of your accounts will have all of the shares or whatever, and there would still be no way to sell them because there are no other market participants to sell to, since you were the only one moving the price. Therefore this kind of market manipulation is coupled with ""promotions"" to attract liquidity to a financial product. (NOTE the mere fact of a promotion does not mean that illegal trading behavior is occurring, but it does usually mean that someone else is selling into the liquidity) Another way to make this kind of trading behavior profitable is via the derivatives market. Options contracts are priced solely by the trading price of the underlying asset, so even if your multiple account trading could only at best break even when you sell your final holdings (basically resetting the price to where it was because you started distorting it), this is fine because your real trade is in the options market. Lets say Apple was trading at $200 , the options contract at the $200 strike is a call trading at $1 with no intrinsic value. You can buy to open several thousand of the $200 strike without distorting the shares market at all,  then in the shares market you bid up Apple to $210, now your options contract is trading at $11 with $10 of intrinsic value, so you just made 1000% gain and are able to sell to close those call options. Then you unwind the rest of your trade and sell your $210 apple shares, probably for $200 or $198 or less (because there are few market participants that actually valued the shares for that high, the real bidders are at $200 and lower). This is hardly a discreet thing to do, so like I mentioned before, this is illegal in markets where actual company shares are involved and should not be attempted in stock markets but other markets won't have the same prohibitions, this is a general inefficiency in capital markets in general and certain derivatives pricing formulas. It is important to understand these things if you plan to participate in markets that claim to be fair. There is nothing novel about this sort of thing, and it is just a problem of allocating enough capital to do so." Rule 610 (Google for it) stands that if Bid and Ask are the same, the market is considered Locked, and the exchange must stop all trading. So the same person can't quote the same bid and ask price. However, HFTs have found ways to circumvent this limitation when exchanges created special order types for them, e.g. Spam-and-Cancel "I don't know how annuities work it's all smoke and mirrors to me. This is a huge red flag to me. I would ask the agent what the penalty is to cancel this contract, and see ho much you can get back. If done right, you should be able to transfer these funds to an IRA or other pretax account.  To be clear, I'd make a similar remark if you said your were in a S&P ETF or any investment you don't understand. ""Appropriate investment"" means little if the investor has no understanding of what they are buying.  Update in repose to comments -" "Yes! What you are describing is an ""off-exchange"" trade and can be done using stock certificates. Here, you will privately negotiate with the seller on a price and delivery details. That is the old-school way to do it. Many companies (about 20% of the S&P 500) will not issue paper certificates and you may run a hefty printing fee up to $500 (source: Wikipedia, above). Other other type of private-party transactions include a deal negotiated between two parties and settled immediately or based on a future event. For example, Warren Buffet created a deal with Goldman Sachs where Warren would have the choice to purchase GS shares in the future at a certain price. This was to be settled with actual shares (rather than cash-settled). Ignoring that he later canceled this agreement, if it were to go through the transaction would still have been handled by a broker transferring the shares. You can purchase directly from a company using a direct stock purchase plan (SPP). Just pick up the phone, ask for their investor relations and then ask if they offer this option. If not, they will be glad for your interest and look into setting it up for you."