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

Buying a put option gives the owner the right to sell the underlying stock at a specific price (strike price) within a certain time period. This implies that the owner expects the stock price to decrease before the expiration date of the option, making it beneficial to sell the stock at a higher strike price than the lower market price. Therefore, an investor who is buying a put option is expecting stock prices to go down.

An Investor Who Is Buying a Put Option Is Expecting