Chapter 02 · Section 2.1

Exercising Options-3

Suppose you are the holder of a PHLX DM put option

You will most likely exercise your put when the option is:

a) out-of-the-money.
b) at-the-money.
• c) in-the-money.
  Yes. When a put option is in-the-money, the price of the underlying asset is lower than the exercise price. You can profit by selling the underlying at the exercise price, then repurchasing the the underlying asset at the lower price on the spot market. Continue

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