What an option is

A holder exercises a put. Who must now perform, and what do they do?

• The holder, who must buy the underlying
• The assigned writer, who must buy the underlying at the strike
• The clearing house, which buys the option back

Your call is out of the money on expiry day. Are you required to exercise it?

• Yes, every option is exercised at expiry
• Yes, unless the writer agrees to cancel it
• No; the holder has a right, and letting it expire is allowed