Schweser study notes page 157: in-the-money options: “if x-s >0, a put option is in the money. x-s is the amount of the payoff from immediate exercise, buying a share for S and seling it in the market for a greater price X.” yes, x-s is the amount of the payoff, but shouldn’t this say “buying a share for s in the market and selling it for greater price X”?, i.e. selling it per the put option to the put option writer for X?
That right…we’ll buy the share in the “Market” for S and deliver it to the put call writter to receive the strike price X.
So that’s Schweser’s error?
it seems like it…but I am begining to doubt myself a lot these days.
wats the problem with schweser? I dont see it. Buy a share at S and exercise your option and sell it at X
If X>ST, you can’t “Sell” the underlying at X in the market. Why would the market pay someone more than the market price of the underlying (ST). You can buy the underlying from the market @ ST and then go to the Put writter to “exercise” your option at X.
Someone did a cut and paste from the call option and forgot to change a word or two. Happens.
As per my understanding also, we “buy from market” & “sell it to Put option writer”.
OK JoeyDVivre, I take it you’re agreeing that Schweser made an error…?
that’s soooo minor, guys just my 0.0000002 cents
cnd Wrote: ------------------------------------------------------- > OK JoeyDVivre, I take it you’re agreeing that > Schweser made an error…? Yep, but I like them anyway.