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.
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.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Options questions
- What is the maximum loss for a buyer of a call option?
- An investor who believes a stock's price will fall would most likely:
- Which of the following occurs if a listed equity option expires unexercised?
- A covered call is created when an investor:
- An investor owns 100 shares of XYZ and buys a put. Which strategy is this?
- Which statement is true about the buyer of a call option?
- What is the breakeven point for a long call?
- When does the seller of an option have the obligation to fulfill the contract?