The put option is in the money, but I do not have the amount of capital needed to buy the number of shares, and then turn around and excercise the option. Do I have to just trade the option contracts?
2006-10-19 07:23:41 · 4 answers · asked by audi s4 1 in Business & Finance ➔ Investing
With a put option, you force someone else to buy shares from you. You are the seller, not the buyer. You don't need any money. However, if you don't have the shares, you would have to buy them before you sell them. Your broker can coordinate it so that you are buying shares with the money you get from selling them.
Prior to expiration, you are always better off selling the option contract rather than exercising it, you get money for selling it -- so don't need to put up cash for that either.
2006-10-19 09:01:48 · answer #1 · answered by Ranto 7 · 0⤊ 0⤋
You don't have to exercise the put option to take profit. In fact, if you exercise it, you are basically throwing away the remaining time value.
The best thing to do is to sell it. Just enter a sell-to-close transaction to sell it.
2006-10-19 18:15:01 · answer #2 · answered by xcalibus 2 · 0⤊ 0⤋
You wouldn't want to exercise it anyways, it is worth more being sold as an option than it is exercised due to the time value of the option.
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2006-10-19 09:15:52 · answer #4 · answered by balla 1 · 0⤊ 0⤋