A incentive stock option is a employee stock option that can only be done by employees. This option causes the employees to pay less on their income taxes.

In short, a free stock option is just a stock option that is free. It gives you the right to buy something, regardless of whether you actually buy it or not.

A valuation stock option is an agreement made to offer the option to purchase the stock at a later date. The price of the option is based on the reference price and the value of the asset in which the stock is being purchased.

Exercising options is done by the option buyer.

If the buyer exercises a put, he is selling to the option writer the stock. If a call is being exercised, he is buying the stock from the writer.

Exercising an option means exercising your rights to buy or sell the underlying asset in accordance to the parameters of the option.

When you exercise a call option, you will get to buy the underlying stock at the strike price no matter what price the stock is trading at in the market.

When you exercise a put option, you will get to sell the underlying stock at the strike price no matter what price the stock is selling at in the market.

In both cases, the option you own disappears from your account.