Londonrocks

@ Job

But all things are not assumed equal in this question. The answer says that it is ALWAYS preferable to exercise an American put at the expiration date.

Consider 2 scenarios where it is NOT ideal to exercise a put at the expiration date:

1) The underlying stock of the put has been depressed so low that the holder of the put option believes that the price is irrationally low and the potential rebound of the stock price before expiration might eat away at his gains. Chances are the amount of the dividend will not be near enough to compensate for the extra gain he can get by exercising this put when the stock is at this irrationally low price. After all, he can exercise his put and then buy the stock right back if he wants to capture any dividends or upward price movements.

2) The put is out of the money.