SIE practice questionhardOptions - Put Writing
An investor writes (sells) a put option, and the stock falls below the strike price. The investor must:
- AReceive a dividend from the issuer
- BDeliver the stock if exercised
- CPurchase the stock at the strike price if exercised✓ Correct answer
- DBuy a call to hedge the position
Explanation
Why C — Purchase the stock at the strike price if exercised
Put writers must buy the underlying if assigned. They do not deliver, receive dividends, or automatically buy calls.
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