If you exercise a put option prior to expiration you ______________.
A) Sell the asset underlying the option contract at the option strike price.
B) Must have been the "writer" of the option when it was created.
C) Will receive less than you would if you let the option run to maturity.
D) Have behaved in a rational manner if the market price exceeds the strike price.
E) Must own a European option.

Question

Quizplus · Accepted Answer

Exercising a put option means the holder sells the underlying asset at the strike price specified in the option contract, regardless of the current market price. This is the fundamental mechanism of a put option.

If You Exercise a Put Option Prior to Expiration You