Quote from: bitoption on June 10, 2011, 03:40:44 AM

If you hold a call, when you exercise it you will get BTC in exchange for USD, yes.
Exercising a put gets you USD for your BTC when exercised.

So, you buy a put, perhaps it's at a strike price of $10. You pay US $3 for each put, and buy 100 of them.

You need $300 US in your account; that goes over to the put writer immediately.
The put writer needs $1000 USD in her account; that is locked immediately, and the exchange will hold it until expiration.

Let's say BTC tanks to $5 per. Bummer for everyone else, but not for you! You can now exercise the put and give 100 BTC to the writer in exchange for her $1,000.

You netted $200 in this case.

The put writer traded $700 in the end for 100 BTC.

Does that help?

Thanks for clearing this up.
Glad you changed the system to work closer to how things are run on the CBOE.