Long a Put option

CFA Level II
#1

A put option is a stock market device which gives the owner of the put, the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).

Question : If i buy a naked put option (i don’t own the underlying), when the stock fall below the strike, how can I sell the underlying? Or is it non-deliverable? Thanks.

#2

You would have to buy it at the market price and sell it to the writer of the put.

Of course, the writer of the put could agree to cash settlement.