Under What Circumstance Will the Buyer of a Put Option

question 117

Multiple Choice

Under what circumstance will the buyer of a put option be asked to fulfill her obligation?

• A) When the stock price has declined below the strike price
• B) When the stock price has increased above the strike price
• C) The put buyer has an equal obligation regardless of the relationship between stock and strike prices.
• D)The put buyer has no obligation whatsoever.

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Definitions:

Arguments

Reasons or statements put forward to support or oppose a claim, idea, or proposal, especially in a legal, academic, or policy context.

Arbitration Hearing

A dispute resolution process where an arbitrator makes a decision to resolve a dispute outside of court.

Court

A governmental institution with the authority to adjudicate legal disputes between parties and carry out the administration of justice in civil, criminal, and administrative matters.

Authority

Authority refers to the legal power or right given to an individual or entity to make decisions, enforce rules, and govern.