SIE practice questioneasyOptions—Call and Put Basics
An investor buys a call option. What right does this give the investor?
- AThe right to sell the underlying security at the strike price
- BThe obligation to sell the underlying security
- CThe right to buy the underlying security at the strike price✓ Correct answer
- DThe obligation to buy the underlying security
Explanation
Why C — The right to buy the underlying security at the strike price
A call option gives the holder the right (but not the obligation) to buy the underlying security at the strike price. Puts relate to selling, and obligations apply to the writers of options.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Options questions