Ah, thanks kasey_junk.

Okay, so I thought I knew enough to work the NFLX example, but I still came up with some mistakes. Unexpected values shown in blue here:

http://oi61.tinypic.com/2h71ndh.jpg

I've probably made a fundamental error, what am I missing?

Don't execute on out of the money options. IE you eat the $700 in fees but you don't actually trade the underlying stocks they represent.

Oh, so you can just pay the fees, cancel the put option, and keep the stock you bought at the beginning of the process?

Or really sell the stock you bought at the beginning of the process if you want to take profit.

Yes, that's one option.

So just so I understand, what flexibility do you have as the purchaser of the put option when it comes to selling. From what I understand the purchaser can choose to sell between the put option maturity date and the put option expiry date, is that correct? Are these typically the same date? Would you pay a premium to have a wider gap between the maturity date and expiration date?

The major difference between OTC and exchange traded derivatives is that exchange traded ones have set contracts that standardize these things. What those set contracts are is exchange to exchange and product offering to product offering.

You can take a look at CBOE's product web page to get an idea about the different kinds of options products they offer.