An option that gives the owner the right to sell a financial instrument at the exercise price within a specified period of time is a(n)________.
A) call option
B) put option
C) American option
D) European option

Question

Quizplus · Accepted Answer

A put option gives the owner the right to sell a financial instrument (such as a stock) at the exercise price (also known as the strike price) within a specified period of time. This can be beneficial if the owner believes the price of the underlying asset will fall, as they can sell it at the higher exercise price. A call option, on the other hand, gives the owner the right to buy an asset at the exercise price within a specified period of time. American and European refer to the style of option, with American options able to be exercised at any time prior to expiry, and European options only able to be exercised at expiry.

An Option That Gives the Owner the Right to Sell