An option creates the obligation for delivery of the underlying asset at a pre-determined point of time in the future.

Question

Quizplus · Accepted Answer

An option gives the holder the right but not the obligation to buy or sell the underlying asset at a predetermined price and date. The seller of the option, however, may have an obligation to sell or buy the underlying asset if the buyer chooses to exercise the option. Therefore, options do not create an obligation for delivery of the underlying asset.

An Option Creates the Obligation for Delivery of the Underlying