- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 8. Pricing and Valuation of Options
- Subject 1. Option Exercise Value, Moneyness, and Time Value
CFA Practice Question
The ______ of a ______ option has the obligation to buy 100 shares of common stock at a specified price for a given period of time.
B. owner; call
C. writer; call
D. writer; put
A. owner; put
B. owner; call
C. writer; call
D. writer; put
Correct Answer: D
The writer of a put option has the obligation to buy 100 shares of stock at an agreed upon price, during the period of the contract.
User Contributed Comments 2
| User | Comment |
|---|---|
| viannie | put option = the right to sell if you sell the put option so if you issue the put option, it's the opposite, you're obligated to buy |
| group | A very good question- viannie you have clarified my confusion: put option is a right to sell and the writer of the put option has the obligation to buy |