I own 15 Ford Motor Co. (Sym:F) Put options $4.00 striike August 2008?

Question

These are my only holdings. What could i do if i were to also buy 100 shares of actual Ford stock along with these put options?

Answer 1

If you own put options, I assume you are betting the stock price will fall.  So why would you want to buy shares where your only increase in value would be from the price rising?  If you think the price will rise, you should definitely sell your put options, and then either buy the shares or buy call options on the stock.

Answer 2

Well, I don't think buying 100 shares of the stock is really relevant at this point to what you with the the options on 1500 shares.  You have an asset that (at current price) will expire worthless in 6 weeks.  It has some value at this moment (about 33 cents each, or $500).  So the question becomes, do I think in the next 6 weeks the price of F will drop from $4.50 to less than $4?  If so, hold on to them, and risk it all.  If not, sell them now and get out with some money.  The longer you wait without the stock price moving downward significantly, the quicker the value with evaporate.   Good luck.