I think about making my first options trade and after studying a bit, I couldn't find answers to some of my questions. So here I am.
What I want to do is buy a PUT option on a stock that I speculate it's price will drop by e.g. 75% within the next 18 months. In that case, the absolute worse scenario is that I'll lose my premium, which is fine.
Now, assume that the underlying stock value decreases by 25% in the next say, 4 months - and that my option's price increases, since now there is a bigger probability for the stock to fail. If I decide to close my position at this point and pocket any profit made, do I need to write the option to someone else? How is it technically done and what are my obligations at this point? From what I understand, if you buy a PUT option but you cannot afford the underlying stock, then essentially you have to wait for the price to go below the strike price, otherwise, if you wanna sell, you're essentially writing a naked option. Is my previous assumption correct, or the only thing I have to do is to give a sell-to-close order and I'm out of that trade?