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SIE: Options
SIE practice questionmediumExercise/assignment

When an option writer is assigned, they must:

  1. ABuy the underlying at market price
  2. BFulfill the terms of the contract✓ Correct answer
  3. CReceive the premium again
  4. DAutomatically close the position
Explanation

Why BFulfill the terms of the contract

Assignment obligates the writer to deliver (calls) or buy (puts) as per contract. The other choices confuse assignment with unrelated concepts.

Turn it into reps

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