I've 50 shares of a company and I'm wanting to leverage that with a put option (Buy to Open, with the expectation share price might drop).

When the prices is right and I want to exercise the option(sell my shares), would I have to have the full 100 shares that an option contract represents or can I exercise and just sell the 50 shares?

I'd read somewhere that I'd go short on 50 shares, but I don't have a margin account.

I've been trading options, buying calls. I feel like I've a good opportunity to get into puts with my current shares.

  • In your situation, if you hold 50 shares and exercise a put option, you will end up with a net short position of 50 shares. If you don't have a margin account, the broker software will not allow you to exercise the put unless you purchase 50 additional shares.
    – Victor123
    Commented Mar 23, 2015 at 2:06

5 Answers 5


First, a margin account is required to trade options.

If you buy a put, you have the right to deliver 100 shares at a fixed price, 50 can be yours, 50, you'll buy at the market.

If you sell a put, you are obligated to buy the shares if put to you.

All options are for 100 shares, I am unaware of any partial contract for fewer shares.

Not sure what you mean by leveraging the position, can you spell it out more clearly?

  • Do you need a margin account to trade covered options? Or just naked ones.
    – Vality
    Commented Aug 1, 2019 at 20:33
  • 1
    @Vality I agree with your quibble about this years-old answer: Fully paid long options, and often covered calls as well, are (and were) allowed in cash (non-margin) accounts. Somehow OP said (presumably accurately) "I don't have a margin account. I've been trading options, buying calls" and yet accepted an answer that said "a margin account is required to trade options", contradicting their own experience.
    – nanoman
    Commented Aug 1, 2019 at 21:16

Your question indicates that you might have a little confusion about put options and/or leveraging. There's no sense I'm aware of in which purchasing a put levers a position. Purchasing a put will cost you money up front. Leveraging typically means entering a transaction that gives you extra money now that you can use to buy other things. If you meant to sell a put, that will make money up front but there is no possibility of making money later. Best case scenario the put is not exercised. The other use of the term "leverage" refers to purchasing an asset that, proportionally, goes up faster than the value of the underlying. For example, a call option.

If you purchase a put, you are buying downside protection, which is kind of the opposite of leverage. Notice that for an American put you will most likely be better off selling the put when the price of the underlying falls than exercising it. That way you make the money you would have made by exercising plus whatever optional value the put still contains. That is true unless the time value of money is greater than the optional (insurance) value. Since the time value of money is currently exceptionally low, this is unlikely. Anyway, if you sell the option instead of exercising, you don't need to own any shares at all. Even if you do exercise, you can just buy them on the market and sell right away so I wouldn't worry about what you happen to be holding.

The rules for what you can trade with a cash instead of a margin account vary by broker, I think. You can usually buy puts and calls in a cash account, but more advanced strategies, such as writing options, are prohibited. Ask your broker or check their help pages to see what you have available to you.

  • Welcome to Money.SE. I found the question a bit confusing as well. If I own 100 shares and a put, it's 'covered.' Similar to selling a covered call. In his case he has 50 share and wants to buy a put, or that's how I am reading this. Commented Jul 16, 2014 at 16:45
  • Thanks for the clarification, I used leverage wrong, I mean covering. Trying to find the best way to position my self with 50 shares. Anticipating a decline with dividend paying out, stock hasn't been going anywhere but I've been doing pretty good with call options in other stocks. Commented Jul 17, 2014 at 19:15
  • @user3826642 probably too late for you now, but my understanding is that the price of a put will factor in dividend payments.
    – user12515
    Commented Oct 26, 2019 at 0:02

There are two ways you can "cash in."

1) Buy enough additional shares to bring your share total to 100, then exercise the put.

2) Sell the put in the open market for a profit.


Roll it into another put with a lower strike and hope it keeps going down. At the very least it will defray the cost of the long position. Ps I think you're looking for the word hedge not lever.


While a margin account is not required to trade options, a margin account is necessary to take delivery of an exercised put.

The puts can be bought in a cash account so long as the cash necessary to fund the trade is available.

If you do choose to exercise which almost never has a positive expected value relative to selling except after the final trading time before expiration, taxes notwithstanding, then your shares will be put to your counterparty.

Since options almost always trade in round lots, 100 shares will have to fund the put exercise, or a margin account must satisfy the difference.

For your situation, trading out of both positions would be probably be best.

  • Thanks, I've been trading mostly in buying calls with cash in my ira but I figured I'd need a margin, not having additional shares to sell. Commented Jul 14, 2014 at 19:20

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