Asked by Darshpreet Singh on Apr 28, 2024
Verified
A European put option allows the holder to
A) buy the underlying asset at the striking price on or before the expiration date.
B) sell the underlying asset at the striking price on or before the expiration date.
C) potentially benefit from a stock price increase.
D) sell the underlying asset at the striking price on the expiration date.
E) potentially benefit from a stock price increase and sell the underlying asset at the striking price on the expiration date.
European Put Option
A type of put option that can only be exercised at its expiration date, not before, contrasting with American options which can be exercised at any time before expiry.
Expiration Date
The set date on which a derivative contract such as an option or futures expires or ceases to exist.
- Understand the concept of European and American options and their exercise terms.
Verified Answer
VB
Virgilia BeemanMay 03, 2024
Final Answer :
D
Explanation :
A European put option gives the holder the right, but not the obligation, to sell the underlying asset at the strike price only on the expiration date, not before.
Learning Objectives
- Understand the concept of European and American options and their exercise terms.