In mid-September, the stock of Oracle (ORCL) is selling for $25.60 a share. Ms. Hedge owns shares of Oracle and buys a put option on the stock with a strike price of $27 that expires in October for $2.20 per optioned share. Just prior to expiration, Oracle's stock is selling for $29. Ms. Hedge should:

Question

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If Ms. Hedge owns a put option on Oracle with a strike price of $27 and Oracle's price is $29 just prior to expiration, she should let her option expire worthless. Her put option gives her the right to sell Oracle for $27. If she wants to sell her existing shares of Oracle, she is better off doing so on the open market and receiving $29 a share for them.

In Mid-September, the Stock of Oracle (ORCL) Is Selling for $25.60