Bazooka, if you have a put in the money by more than 3/4 of a dollar, the option, on expiration day, will auto-exercise and you will automatically put the stock to someone.
Lets say the strike price is 80and the stock is at 50. You will have the right to put the stock to someone at 80. You will have an effective sale at 80, yes, effectively avoiding an uptick rule, but no, most firms usually charge commission on options exercising and having options exercised against you. Nonetheless, you want to compare the bid on the option vs. the market price of the stock. ie,..if you dont want to be short, you can either sell the put, or sendinstructions to exercise the put and buy stock.
You need to do an analysis of the various bid/offerson the stock and options and pursue that which gives the greatest return. Often I will exercise a call and sell the stock in the open market because the bid on the stock is better than the bid on the option.
Regards,
Steve@yamner.com |
