Early exercise in physical commodity

H

heech

Hi there,

A few weeks/months back on this forum, there was a long discussion of early exercise of equity options. The conclusion was that early exercise should only happen if dividends are involved, ie dividends greater than residual value.

But I just had some deep ITM puts in soybean oil exercised today. About 10% from the market, with 4 days until expiration. Settlement value last night was something like $30.

Granted, it's not a lot of money. But why would someone throw away even $30, and exercise early?
 
First of all, DO NOT assume that someone just threw away $30. If they exercised then there was a good reason for this. I'm no expert in commodity options, but the logic tells me that the principle is pretty much the same - if one is cheaper than the other then you go with the cheaper one.
 
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