Question

Which of the following statement describes an option contract and the major distinction between a call and a put option?

Select one:

a. A call option contract gives a buyer the right not the obligation to purchase an underlying security at certain price specified in the call option contract.

b. A put option contract gives a buyer the right not the obligation to sell an underlying security at certain price specified in the put option contract.

c. An option is defined as the right, but not the obligation, to buy or to sell a specified amount of a given stock, commodity, currency, index or debt, at a specified price (the strike price) for a specified period of time.

d. None of the given answers

e. All of the given answers.

Answer 1

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Answer:

Call option defintiion is the  contract gives a buyer the right not the obligation to purchase an underlying security at certain price specified in the call option contract.

Ans the put option gives a buyer the right not the obligation to sell an underlying security at certain price specified in the put option contract.

Hence all the above options are true