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SIE practice questioneasyOptions — Calls vs Puts

A call option gives the holder the right to:

  1. ABorrow the underlying security from the OCC
  2. BReceive dividends from the underlying stock
  3. CSell the underlying security at the strike price
  4. DBuy the underlying security at the strike price✓ Correct answer
Explanation

Why D — Buy the underlying security at the strike price

A call option gives the holder (buyer) the RIGHT to BUY the underlying security at the strike price before expiration. A put option (A) gives the right to sell. Options do not entitle holders to dividends (D) or borrowing rights from the OCC (C). Remember: 'Call up' = buy, 'Put down' = sell.

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