In exchange for the rights inherent in an option contract,the owner of the option will typically pay a price
A) only when a call option is exercised.
B) only when a put option is exercised.
C) when either a call option or a put option is exercised.
D) at the time the option is received regardless of whether the option is exercised or not.

Question

Quizplus · Accepted Answer

The payment for an option contract, known as the option price or premium, is typically paid at the time the option is received, regardless of whether the option is exercised or not. This is because the owner of the option has the right, but not the obligation, to exercise the option at any time during its validity period. Therefore, the option holder pays a price upfront to have the option available to them, even if they never end up exercising it.

In Exchange for the Rights Inherent in an Option Contract,the