Selling a $77.50 strike put option gives the buyer of the option the RIGHT to sell these shares to you on or before expiry (March 14). So as long as the price is below 77.5 the option can be exercised. It should be noted that option premium is a sunk cost and will not effect the decision of exercising the option.

Possible if stock is just below $77.50

Work out if the buyer can make money (or reduce loss) by exercising (taking into account costs).

Your last assumption is definitely wrong.

Hi,

The premium for a stock option is $1.50 for March 14 strike $77.50.

Current stock price: $77.50

If I sell one contract of the above stock option for $150 would that mean that owner of that contract will exercise his put option only if the stock price falls below $76?

Thanks!