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To: Dennis Kern who wrote (109846)3/17/1999 9:48:00 AM
From: PAL  Respond to of 176387
 
Dennis:

There is a chance that a seller of puts gets assigned before expiration date (when the option is in the money). The system of CBOE for stocks is called American Style Option which means that the option can be exercised anytime prior to/up to expiration date . In in in contrast with European Style Option where you can only exercised on expiration day. European style option is used on index option. In either style of option, if one does not want to own it, one can always sell.

Would anyone exercise stock option before expiration? There is always a chance. But if there is a time premium, it would be better to sell outright. So, if the stock option is exercised, one can deduce that it usually happens near expiartion day when time premium is practically zero.

Hope that helps.

Paul



To: Dennis Kern who wrote (109846)3/17/1999 10:04:00 AM
From: PMS Witch  Read Replies (1) | Respond to of 176387
 
Off topic: Put exercise

My experience with writing puts has been that when the puts become in-the-money by a fair bit, they get exercised -- often early. The time value is usually a smaller loss than the interest value of holding the shares; hence, selling. Hope this helps, PW.