so with all those chinese stocks getting halted left and right, whats up with expiring options? Search on the net shows the following main point: THE RIGHT TO EXERCISE AT ANY TIME REMAINS INTACT!!! beyond that there are four possibilities. 1) If you are long a call you can call it 2) if you own a put you can put your shares I think most people will agree with these two points, but what about this other two situations? 3) you own a put, but have no shares to deliver. If you were a bigshot client, would you be able at least in theory to call your broker and have them go out and try to borrow and deliver the shares in order to stay short? Is there any rule or regulation to stop you from doing this? 4) if you are short the naked calls and someone calls them in, would this not nearly always result in a delivery fail? Any comment from the oldtimers? Explanations of actual practices of different brokers will be very much appreciated.
if you exercise your put, which i assume you are really asking, you will take a short position. you will need to still maintain the margin for that position and pay any short stock fees.
There is some info via Google on this but the short answer is options are cleared at the last price of the stock if it's halted. Some of the halts are lasting months and months ... which is killing short sellers who make the correct short bets but can't sell so they take it in the a** on shorting fees. There is some talk in the SEC on fixing this to some degree, but it won't be perfect... Bear Call spreads might be the best way to play these via options but there isn't alot of juice in them ... and it's going to hold your margin ...