If I exercise an ITM put option in an account with zero positions open, will the put option exercise if I have adequate capital in my account?

Question

I only buy puts. I now have a question about exercising puts. I am not able to exercise puts in my simulated account, so I wanna ask you guys & gals a question before I try it on my real account. Thanks for any answers that are inline with the question. P.S. I know most of the time it might not be profitable to exercise an option, but thats not the question.

Question: I am wondering if I exercise an ITM put option in an account that has zero positions open, will the put option exercise if I have adequate capital in my trading account? -is it not required for me to hold any shares long or short of the same ticker at the time of exercise? -So if I exercise 1 long put option, I will now be short 100shares at the puts strike price?

Thanks

Answer 1

Assuming that you have the cash or margin available and the appropriate account approval, if you exercise a put, you sell at strike price. If you exercise a call, you buy at the strike price.

If you hold an opposing in the underlying, the positions cancel out. If not, you end up with a position in the underlying, either long or short.

Answer 2

This depends on your broker and the status of your account.

If you have a margin account, and your broker is 'typical', the Put will be executed, and you end up with "-100 shares" (or however many you put). It's then up to you to buy them back someday, or pay a small fee per day for 'borrowing' them.
If you run into a margin call, your broker may force-buy them back for you - at market price. Normally you would try to avoid that situation, so learn about margin requirements. Or even better, sell the put for money instead of executing it.