Assume that a writer sells a March Intel put at an exercise price of $40 when the stock price is $41.15. The premium is $0.30, or $30 for 100 shares, which the buyer of the put pays and the seller (writer) receives. Suppose the price of Intel declines to $35 near the expiration date. The put owner (buyer), who did not own Intel stock previously, could purchase 100 shares of Intel in the open market for $3,500. The buyer could then exercise the put, which means that a writer chosen randomly must accept the 100 shares of Intel and pay the put owner $40 per share, or $4,000 total (although the current market price is only $35). The put buyer grosses $470 ($4,000 received less $3,500 cost of 100 shares less the $30 paid for the put). The put writer suffers an immediate paper loss of $500 because the 100 shares of Intel are worth $35 per share but have a cost of $40 per share, although the premium received by the writer reduces this loss by $30. All brokerage costs are ignored in this example.