getting assigned a put - how to settle

[jbperez808]

If I get assigned a put, is it necessary to have cash to take delivery of the entire contract or is it possible to just have enough cash for the difference between the contract strike price and the market price?

e.g.

1) sell ABC put at strike price of $170
2) ABC ends at $168 on expiration Friday

Is it necessary to have the $17000 to take delivery of 100 shares ABC or is it enough to have the $200 difference to immediately buy/sell ABC and close out my position?

 

[arabianights]

why would you want to take delivery rather than just closing the short?

someone will need to put up the $17000 - your broker may or may not be prepared to do it, you need to check

you will CERTAINLY need more than $200 though

 

[arabianights]

(of course if it's exercised early then the margin will cover that nicely)

 

[jbperez808]

^ Ok... does this mean that if exercised early, there is no need to take delivery? The broker can/will execute the buy/sell for me?

(This would mean having to pay 2x commissions, one for the buy and one for the sell though right ? )

 

[Martinghoul]

If you don't have enough margin, the broker will do the liquidation for you (exercise and sell at mkt). But always always check with your broker.