Question

1. Which of following statements about options contracts is correct?
   1. The holder of a European call option has the right to buy the underlying asset at the exercise price on or before the expiration date.
2. 2. The holder of an American put option has the right to sell the underlying asset at the exercise price on or before the expiration date.  
   3. The holder of a European put option has the obligation to sell the underlying asset at the exercise price on the expiration date.
   4. The holder of an American call option has the obligation to buy the underlying asset at the exercise price on the expiration date.  

Answer 1

1. Holder of the option has right to buy or sell the shares.

a. Holder of call option has right to buy.

b. Holder of put option has right to sell.

2. Writer of the option has obligation to buy or sell the shares when the holder exercises their option.

3. An American option can be exercised on or before the maturity date.

4. European option can be exercised only on Maturity date.

So, based on the above information the correct option contract is,

The holder of an American put option has the right to sell the underlying asset at the exercise price on or before the expiration date.