Lesson 3.2: Actions to Take at Expiry

The Long Put Masterclass (Bearish).

When the clock runs out on your NVDA $218 Put, your action depends entirely on where NVDA is trading:

Scenario 1: NVDA is ABOVE $218 (Out-of-the-Money)

The Result: Your right to sell at $218 is worthless because the market price is higher.
Action: Do Nothing. The option will simply disappear from your account on Saturday morning. You lose the initial $3,040 premium paid.

Scenario 2: NVDA is BELOW $218 (In-the-Money)

The Result: Your option has “Intrinsic Value.”
Action A (Close for Cash): This is what 99% of traders do. You “Sell to Close” the put before the market closes on Friday. You collect the cash value (the profit) and walk away.
Action B (Exercise): If you already own 100 shares of NVDA, you can “Exercise” the put to sell your shares at $218. This is how you use a put as Insurance.
Action C (Automatic Exercise): If you do nothing and the put is ITM by at least $0.01, your broker will automatically exercise it. If you don’t own the shares, you will wake up Monday morning with a Short Stock position (100 shares sold).