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To: Kayaker who wrote (99640)	2/16/1999 9:56:00 AM
From: edamo	Read Replies (1) \| Respond to of 176388

why would you excercise if the put premium you paid is becoming an appreciating asset...the psychology of the put for insurance, is overshadowed by the put itself being a tradeable instrument...on oct 8, if i bought my put insurance on dell, say by buying a 45 strike price on the contract..with the stock at 41 in the morning...i looked smart...but when the stock closed @ 50+, and never looked back, the insurance seller put the premium in his pocket...

To: Kayaker who wrote (99640)	2/16/1999 10:34:00 AM
From: JBird77777	Read Replies (3) \| Respond to of 176388

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