Which one of the following actions obligates you only on the expiration date to sell an asset at the strike price if the option is exercised?
A) Writing an American call
B) Buying an American put
C) Writing a European call
D) Buying a European put
E) Entering a European swap

Question

Quizplus · Accepted Answer

Writing a European call obligates you to sell the asset at the strike price only on the expiration date if the option is exercised. European options can only be exercised on the expiration date, whereas American options can be exercised at any time before expiration. Buying an American put would give the holder the right to sell the asset at the strike price at any time before expiration. Buying a European put would give the holder the right to sell the asset at the strike price only on the expiration date if the option is exercised. Entering a swap is a different type of financial contract and does not involve options or exercising.

Which One of the Following Actions Obligates You Only on the Expiration