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Technology Stocks : Dell Technologies Inc.

DELL 133.78

-0.1%

Nov 14 9:30 AM EST

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To: Kayaker who wrote (99640)	2/16/1999 10:34:00 AM
From: JBird77777	Read Replies (3) of 176387

RE: Exercise of a put contract prior to expiration Just as calls should not be exercised before expiration, similar math dictates that puts generally should not be exercised before expiration. At market close on expiration day, the premium in the put diminishes to zero, and the put price equals the amount (if any) by which the strike price exceeds the stock price. Prior to expiration, there is a premium in the put price, so that the put price equals the premium plus the amount (if any) by which the strike price exceeds the stock price. Accordingly, a put holder who believes that the stock price has bottomed will generally be better off selling the put and receiving the premium, rather than exercising the put and not receiving the premium. The only rational exception would be if there were a tax advantage to the put holder in exercising, that might exceed the forfeiture of the put premium. This is simply the math of the issue. If anyone knows how often puts are actually exercised before expiration, please advise. JB

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