7.17 Put early exercise on Non-Dividend Paying stock Early exercise of a put is a trade-off between Receiving the strike price sooner Risk that stock price will rise above the strike price If the interest on the strike price outweighs the insurance benefit, early exercise is beneficial EXample is deep in the money puts Options, Futures, and Other Derivatives, 4th edition@ 2000 by John C. Hull Tang Yincai, Shanghai Normal UniversityOptions, Futures, and Other Derivatives, 4th edition © 2000 by John C. Hull Tang Yincai, Shanghai Normal University 7.17 Put Early Exercise on Non-Dividend Paying Stock • Early exercise of a put is a trade-off between – Receiving the strike price sooner – Risk that stock price will rise above the strike price • If the interest on the strike price outweighs the insurance benefit, early exercise is beneficial • Example is deep in the money puts •