Options beginner here. I have a protective put on a stock and it became ITM 2 days before expiration. I do not want the option to be exercised, since I’m bullish on the stock, and want to continue holding. I’m afraid that if I leave the put to expire, it will be exercised. I also do not want to sell off the put, because I will then be in obligation to the put buyer to buy stock. What are my choices here?
If you sell your Put (closing the position), you are not in any further obligations, you get your sale price in cash and walk away.
I don't understand what makes you think you would be in any relationship with the put buyer - if you don't have or own any Put, you are out of the deal. If your buyer executes the Put, a random put writer is picked to fulfill it - from all the puts still written. You are no longer in that list, as you closed your position.
I also do not want to sell off the put, because I will then be in obligation to the put buyer to buy stock.
The above is incorrect and is not how it works.
As the owner of the put, you have the right to sell the stock at the strike price any time before expiration. It's your decision, not someone else's.
However, the decision would be out of your hands at expiration because the OCC exercises options that expire in-the-money, whether they be long or short. This is called Exercise By Exception.
If you are long the option, you can designate to the OCC via your broker that you do not want your long option to be auto exercised. This would make sense if it about to expire with the underlying near the strike price (pin risk).
What makes the most sense is if your put is ITM, sell it to close for its gain or its salvage value. Then, your option position will cease to exist.
Options 201: If you would like to continue to own a protective put, if you have the appropriate option level approval, use a spread order to close the existing long put and buy a put for a later expiration. It's more efficient.