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Technology Stocks : Dell Technologies Inc.

DELL 120.53

+0.7%

Jan 16 9:30 AM EST

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To: Chuzzlewit who wrote (153384)	2/9/2000 3:13:00 PM
From: GVTucker	Read Replies (1) of 176387

Chuzzlewit, RE: I've noticed that in my own trading -- most recently with TYC where 40% of my short put position was put to me almost 1 month before expiration. What confused me is that the put still had some time value in it (around $1.50 as I recall). Can you tell me why this happens? Two reasons why put options are exercised early. 1. The put is very deep in the money, and the interest on the funds realized by the put holder exceed the time value remaining in the put. 2. The owner of the put has tax reasons for the early exercise and wants to sell the stock; the tax benefit here theoretically should exceed the time value remaining in the put. 3. (Most likely in your case) The put owner is an uneducated investor, and doesn't realize that selling the put and selling the stock on the open market would realize more funds. This could be exacerbated if the put owner mistakenly believes that his/her position is short term bullish. For call options, dividend capture would be a reason for early exercise also, but this case would not exist for a put option.

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