Suppose an Investor Sells (Writes)a Put Option

question 40

Multiple Choice

Suppose an investor sells (writes) a put option.What will happen if the stock price on the exercise date exceeds the exercise price?

• A)The seller will need to deliver stock to the owner of the option.
• B)The seller will be obliged to buy stock from the owner of the option.
• C)The owner will not exercise his option.
• D)The option will extend for nine more months.

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Definitions:

Avoidant-Fearful

A subtype of avoidant personality disorder characterized by a pervasive pattern of social inhibition, feelings of inadequacy, and hypersensitivity to negative evaluation.

Avoidant-Dismissing

A style of attachment characterized by a self-reliant attitude and a tendency to minimize the importance of close relationships.

Emotional Distance

A state in which people emotionally withdraw or isolate themselves from others, typically as a protective measure.

Preoccupation

The state of being absorbed with or engrossed in a particular thought, activity, or concern, often to the exclusion of other considerations.