SIE practice questioneasyExercise/Assignment
When does the seller of an option have the obligation to fulfill the contract?
- AOnly if the premium falls below the strike price
- BAt the time of sale
- CAt expiration regardless of exercise
- DWhen the option is exercised by the buyer✓ Correct answer
Explanation
Why D — When the option is exercised by the buyer
The seller’s obligation is triggered only if the buyer exercises the contract. B and C are inaccurate regarding trigger events, and D is an unrelated metric.
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