Question

Which of the following statements about options is TRUE ? A "put " option gives the buyer the right to buy futures A call option gives the buyer the right to sell futures An option has no maturity date The option buyer's maximum loss is the premium paid for the option

Answer 1

A "Put" option gives the buyer the right to sell futures.

A "Call" option gives the buyer the right to buy futures.

Each option has a maturitty date.

When a option is purchased, the buyer pays a premium upfront. This upfront payment is the purchase price of the option. The maximum loss that a buyer can have is equal to the premium paid for the option.

Thus,

The true statement is a option buyer's maximum loss is the permium paid for the option.

Hence, the correct answer is the option (d) [The option buyer's maximum loss is the premium paid for the option].