In a call options contract, the
A)seller has the obligation to deliver the instrument at a specified time.
B)buyer has the obligation to receive the instrument at a specified time.
C)seller may choose whether or not to deliver the instrument at a specified time.
D)buyer will choose to exercise his option only if the value of the underlying security falls.

Question

Quizplus · Accepted Answer

In a call options contract, the seller (also known as the writer) has the obligation to deliver the underlying instrument at a specified time if the buyer (also known as the holder) chooses to exercise the option. The buyer has the right, but not the obligation, to exercise the option and receive the underlying instrument. Therefore, the correct answer is A: the seller has the obligation to deliver the instrument at a specified time.

In a Call Options Contract, the