I bought a put option with strike 453 for 3.23 per share with the current underlying price at 448. This means that I should be able to exercise immediately and make 1.77 per share profit. I’m using power E*Trade and there appears to be no option for exercising options at all. I’ve searched google and the web and nobody shows how to exercise options early. Also why does this appear to be making something from nothing. Am I misunderstanding anything here??

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    Can you show some more details? Are you sure it's an American option? What underlying? Are you sure about the position and size?
    – AKdemy
    Aug 4, 2023 at 6:43
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    453 put option on SPY with expire date 8/4/2023(today). Cost is 3.21. On etrade
    – JohnDough
    Aug 4, 2023 at 13:22
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    OK, thanks. The last trade price of 3.21 was not traded with a spot of 448. However, you could have exercised at 448, that is true. It would probably have been more beneficial to sell an equivalent put as an offsetting position (there was still time value left, and the new price would have reflected the larger difference between strike and spot). I cannot comment on how to exercise with your broker.
    – AKdemy
    Aug 4, 2023 at 13:41

2 Answers 2


Options never sell for less than their intrinsic value - you were seeing an after-hours quote for the ETF or the options, but not both. The market just opened and SPY opened at 450.7 which would make your option price more reasonable, and makes me think that you were seeing the previous day's close for SPY rather than an after-hours price that the option price was based on. The fact that you can't exercise it immediately is likely also because it was after-hours.

Even if you could have exercised your option, you would have either sold existing shares at 453, or you would ended up with a short position on SPY that you would not have been able to cover at 448, so you would not have immediately profited.

  • Options do indeed sell for less than their intrinsic value. Look at the bid of deep ITM options expiring this week. Many have bids below parity (there's no incentive for anyone to give you the full intrinsic value). A seller would be foolish to do so and could avoid taking the haircut if one had the buying power to do the discount arbitrage. Aug 14, 2023 at 19:13

Something is wrong here. With the underlying at $448, the intrinsic value of a $453 put is $5. You're not going to be able to buy it for $3.23

Be that as it may, if you exercise your $453 put, you go short the underlying at $453. You don't automatically lock in the difference just by exercising.

Stop googling the internet for an answer. Call E*trade and ask what the web site procedure is for exercising American options.

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