I am new to options and have a question regarding USG. I don't see any beginning options boards with recent activity. My question is:

If I sell a put for USG with a 2012 expiration with a strike price of $17.50 and premium of $5.80, are there any circumstances where the put will be exercised at less than $11.70? If so, how likely is this to occur?

I am viewing the use of the Put as either a way to earn the premium or acquire the security at today's price less the premium. How do I access other potential risks?

Thank You,

Elliot

Elliot:

The buyer of the put has the right to assign the shares at ANY TIME until expiration at $17.50 meaning you have to have $1,750.00 available in your brokerage account to cover the trade. Since the buyer already gave you $580.00 per contract, you only have to come up with an additional $1,170.00.

How likely is it that you will be assigned? Rather unlikely since the option buyer can sell the put instead at less cost to himself. But it can happen, specially if the price of underlying USG drops a lot.

Options board: http://boards.fool.com/Messages.asp?mid=28190266&bid=113...

Denny Schlesinger