# Question on options

I’m a little confused on how options work in application. For example, say you buy a put on stock xyz, with strike 7.50, expires in November. The underlying stock is at 10, and the put costs .30, so, \$30 for one contract. What happens if the stock goes down to 8? The put option price will increase, say 0.50, but the stock still is not lower than the strike of 7.50. Can you sell your put option for 0.50, or \$50? Would this close out your position, or are you now “short put”? Would the same concept apply if your position moved against you (e.g. the underlying went up, and your put is now near worthless and far out of the money, .10, can you sell for the \$10)? Looking at the graphs, they seem to figure that you hold until expiry, but if you can make a profit before then by selling the contract and closing out your position, then the graph doesn’t seem to take that into account.

If you buy a 7.50 put for .30 when the underlying is 10…you are long a put…If underlying goes down to 8…your put will be worth more as it approaches the strike. The increase in value of the put will depend on the time to expiration. if you sell your put at 0.50 vs 0.30 purchase…you will close out your position. short + equal size long = Flat! If you hold until expiration, and exercise is 7.50 with underlying trading at 8,put will be worthless…why exercise to sell at 7.50 when you would have to buy back at 8 ? If 8 is trading 2 months before the 7.50 strike,the time value would make the option worth more than the .50 for example. If stock goes to 10…would you exercise your chance to sell at 7.50 and take a loss of 2.50 and the cost of your put…or just let it expire and suffer the smaller loss of what you paid for the put…you were paying for the opportunity, which didn’t appear to work out in that case. Any clearer?