What is the essential difference between a call option and a put option?
A) A call option transaction occurs now, while a put option transaction takes place in the future.
B) An call option transaction is the right to purchase the underlying asset, while a put option is the right to sell the underlying asset.
C) An call option transaction is not standardized, while put option transaction is standardized.
D) An call option transaction deals with financial assets, while a put option transaction deals with commodities.

Question

Quizplus · Accepted Answer

The essential difference between a call option and a put option is that a call option gives the holder the right to purchase the underlying asset at a specific price, while a put option gives the holder the right to sell the underlying asset at a specific price. Therefore, option B is the correct choice. Options A, C, and D are incorrect because they do not accurately describe the difference between call and put options.

What Is the Essential Difference Between a Call Option and a Put