With options I don't understand how the buyer of these instruments gets paid if they're in the money. Does the call seller own the shares that the call buyer gets for a lower price? How does a put seller pay a put buyer if the stock goes below the strike price? What is best place to practice with options? Thanks.
The buyer doesn't get paid if they close in the money. He'll actually buy the shares at the strike price and then makes money when he sells the stock. The buyer would profit without dealing with the stock if he simply sells the options before expiration. As for puts, the put buyer would be able to get short the stock at the strike. Hence it's the option to call stock in (buy) or put stock away (sell).
