Which of the following statements is true about options?

Question

Quizplus · Accepted Answer

Options give the buyer the right, but not the obligation, to buy (in the case of a call option) or sell (in the case of a put option) a security at an agreed-upon price within a specified period of time. This makes statement B correct. Statement A is incorrect because the option is sold by the option writer (seller) to the option holder (buyer), not the other way around. Statement C is incorrect because it mistakenly states that the buyer has an obligation to buy, which contradicts the fundamental nature of options, where the buyer has a right but not an obligation.

Which of the Following Statements Is True About Options