Put option - exercise when it expires but don't have enough money to buy stocks to sell

External question — Personal Finance Stack Exchange Author: Bằng Rikimaru Original post: https://money.stackexchange.com/questions/137812 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Ok, so here is my plan. I wanted to buy put options which will sell Tesla stock at Strike price 900 Euro in June, 2021. The price for an option is 2.3 Euro and I will buy 1000 options (total cost to buy 2300 Euro). I'm using TradeRepublic broker. If I'm right, in June, Tesla stock price will be at 400 Euro , and I hold the options until that date. It means, I have the right to sell 1000 Tesla stocks at 900 Euro . However, suppose I only have 1000 Euro left in the account and I don't have 1000 * 400 = 400 000 Euro to buy 1000 stocks and sell all with 900 * 100 = 900 000 Euro. What will happen in this case? Will the broker automatically buy 1000 stocks at 400 Euro and sell them at 900 Euro and just give the money gain (900 000 - 400 000 - some fee) to my account (+500 000 Euro)? Or my options are voided as I don't have money to buy stocks to sells when the options expire, and I'm lost all the money (2300 Euro) which I used to buy options?

External answer — Personal Finance Stack Exchange Author: Alex bGoode Original post: https://money.stackexchange.com/a/154910 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. You cannot trade real options on the broker Trade Republic or, as far as I know, any other German brokers. You trade something that is similar (but a lot worse) which are called Optionsscheine which translates roughly into warrants . These warrants can not be exercised, but are settled at the expiration date. All warrants (I have ever seen) traded in Germany are cash settled, meaning there are never any stocks bought or sold. You buy a warrant from a bank and they give you some cash at the end. So there is no need for you to have any cash in your account at the expiration date or at any time before, because you cannot exercise these warrants and only sell them. Warrants come with a counterparty risk. If the bank that wrote the warrant goes bankrupt your money is gone.