SIE practice questioneasyExercise/Assignment
If a put option is exercised, what must the seller of the put do?
- ADeliver cash to the buyer
- BSell the underlying stock at the strike price
- CBuy the option premium
- DBuy the underlying stock at the strike price✓ Correct answer
Explanation
Why D — Buy the underlying stock at the strike price
When exercised, the put seller must buy shares at the strike price. B is the buyer’s right, C is unrelated, and D is not a direct requirement under standard contracts.
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