SIE practice questioneasyPut options
If an investor buys a put option, which right does this contract provide?
- AThe obligation to buy stock if assigned
- BThe right to buy stock at the strike price
- CThe obligation to sell stock if exercised
- DThe right to sell stock at the strike price✓ Correct answer
Explanation
Why D — The right to sell stock at the strike price
Buying a put gives the holder the right, but not the obligation, to sell shares at the strike price. B describes calls, while C and D confuse rights with obligations, which apply to sellers (writers), not buyers.
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
- An option's premium is defined as:
- An investor buys a call option with a $50 strike price when the stock is trading at $55. What is the option's intrinsic…
- When does the seller of an option have the obligation to fulfill the contract?
- Compared to non-putable bonds, puttable bonds generally:
- Which statement is true about the buyer of a call option?
- Why might an investor choose a puttable bond?
- A covered call is created when an investor:
- A puttable bond allows the investor to: