Which of the following is true of options?
A) The writer decides whether the option will be exercised.
B) The writer pays the buyer the option premium.
C) The buyer decides if the option will be exercised.
D) More than one of these.

Question

​Which of the following is true of options?
A) ​The writer decides whether the option will be exercised.
B) ​The writer pays the buyer the option premium.
C) ​The buyer decides if the option will be exercised.
D) ​More than one of these.

Quizplus · Accepted Answer

The buyer of an option has the right, but not the obligation, to exercise the option. Therefore, they are the ones who decide whether or not to exercise. The writer of an option, on the other hand, is obligated to fulfill the terms of the option if the buyer chooses to exercise it. The writer also receives the option premium from the buyer.

​Which of the Following Is True of Options

Which of the Following Is True of Options