An option that gives the option buyer the right to buy the commodity or financial instrument specified in the contact at the exercise price is called:
A) an American option.
B) a European option.
C) a call option.
D) a put option.

Question

Quizplus · Accepted Answer

A call option gives the option buyer the right to buy the underlying asset at the pre-determined exercise price. This is a bullish option as the buyer profits from the underlying asset price going up. An American option can be exercised at any time before the expiration date, while a European option can only be exercised at the expiration date. A put option gives the option buyer the right to sell the underlying asset at the pre-determined exercise price.

An Option That Gives the Option Buyer the Right to Buy