If you thought the share price of a stock was going to fall,would you be more likely to buy a call option or a put option?
A) a call option
B) a put option
C) a call option and a put option
D) There is not enough information given to answer this question.

Question

Quizplus · Accepted Answer

A put option gives the holder the right to sell the underlying stock at a certain price (strike price) before the expiration date. If the share price falls below the strike price, the holder can exercise the option and make a profit by selling the stock at a higher price than the current market price. Therefore, if you think the share price of a stock is going to fall, buying a put option would be the best choice.

If You Thought the Share Price of a Stock Was