An investor who is buying a put option is expecting:
A) stock prices to go up.
B) stock prices to go down.
C) interest rates to go up.
D) interest rates to go down.

Question

Quizplus · Accepted Answer

When an investor buys a put option, they are essentially buying the right to sell the underlying stock at a specific price (strike price) before the expiration date. This strategy is used when the investor expects the stock prices to decrease in the future, as they can then exercise the option and sell the stock at the higher strike price, thereby profiting from the difference.

An Investor Who Is Buying a Put Option Is Expecting