SIE practice questioneasyOptions
Which statement is TRUE regarding a put option?
- AIt gives the holder the right to buy a security
- BIt is only used in retirement accounts
- CIt gives the holder the right to sell a security✓ Correct answer
- DIt obligates the buyer to deliver the underlying asset
Explanation
Why C — It gives the holder the right to sell a security
A put option gives the holder the right, but not the obligation, to sell a security at a specified price. Calls allow buying, not selling, and options are not restricted to retirement accounts.
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