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jkens,

You wrote, If this person sold the puts and the stock continued to fall, at expiration would he automatically be put the stock at the strike price in which he entered the trade or does someone need to initiate this action?

In other words, can the put expire in the money and him not be required to take the stock?


My understanding is that it depends on the policies of the broker holding the account holding the put. As I understand it, most brokers will automatically exercise options at expiration that are more than a certain amount ITM. How much that is varies by broker; but it's usually not much more than the amount required to cover a commission.

But I suppose you could get lucky...

- Joel
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