Series 7 practice questioneasyOptions — Put Options Basics
A put option gives the holder the right to do which of the following?
- ABuy the underlying stock at the market price
- BSell the underlying stock at the market price
- CBuy the underlying stock at the strike price before expiration
- DSell the underlying stock at the strike price before expiration✓ Correct answer
Explanation
Why D — Sell the underlying stock at the strike price before expiration
A put option gives the holder the right to sell the underlying security at the strike price on or before expiration. The put buyer profits when the price of the underlying security declines below the strike price minus the premium paid.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 755+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Investment Information & Recommendations questions
- Which of the following investors would benefit from a rise in the price of the underlying stock?
- A call option gives the holder the right to do which of the following?
- What is the maximum loss for a buyer of a call option?
- An investor seeking the SAFEST short-term investment with maximum liquidity should consider: