The buyer of a put option on Boeing with a strike price of $75 and an expiration date in November 2003 has the
A) right to buy 100 shares of Boeing at $75 on or before November 1999.
B) right to sell 100 shares of Boeing at $75 on or before November 1999.
C) right to buy 100 shares of Boeing at $75 on or after November 1999.
D) right to sell 100 shares of Boeing at $75 on or after November 1999.

Question

Quizplus · Accepted Answer

A put option gives the buyer the right to sell (not buy) a specific underlying asset (in this case, shares of Boeing) at a predetermined price (strike price) on or before a specified date (expiration date). Therefore, the buyer of a put option on Boeing with a strike price of $75 and an expiration date in November 2003 has the right to sell 100 shares of Boeing at $75 on or before November 2003. Thus, option B is the correct answer.

The Buyer of a Put Option on Boeing with a Strike