S-U_2

S-U_2 t1_iy7831u wrote

Kinda confused about what you said.

If a put is exercised the Put Buyer will automatically buy the shares on the market (currently at a low price) and force them on the Put Writer/Seller at Strike Price (higher than market value). This happens all in the background So unlike a Call Being exercised you shouldn't have +100 (or whatever) shares because it's already forced onto the Put Writer/Seller.

They will have to pay you a higher price for the shares then what they're actually worth (so buy at Strike Price instead of Market price) and you get money in your account.

So you should be able to pay your broker immediately?

Or am I missing something....

Small example:

So

Lets say Strike Price is 100 dollars Market value is 40 dollars I buy 40$ * 100 share's = 4.000$ Put Writer must pay (done automatically) 100$ * 100 shares = 10.000$ You made 6.000$ (before fee's and/or taxes) So your debt is settled....

Right....?

1

S-U_2 t1_ixsg5aq wrote

As someone still learning options. I wonder if buying a straddle at the strike price would be a bit safer when you're dealing with a (currently) light fluctuating stock/etf and selecting a very short expectation date?

2