Cleaning up after expiration

Quantitative Finance Level 1

On expiration, the stock closed at $100. When the trade settles, what do you need to do if you are short the put on the $90 strike to close out your position?

Call up the exchange for instructions Buy the stock Sell the stock Buy the Call on the $90 strike Buy the Put on the $90 strike Buy the Put on the $100 strike Nothing

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Calvin Lin by Calvin Lin

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2 solutions

lost the money

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Chew-Seong Cheong
Mar 19, 2015

When the strike price of the put you short (sell or write) is lower than the stock price on expiration, the put holder (the buyer who long the put) will not exercise the option and you profited the option premium (price) paid by the put buyer.

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