Giving the purchaser the right to sell the underlying security at a prespecified price is a
A)put option.
B)call option.
C)naked option.
D)futures option.

Question

Giving the purchaser the right to sell the underlying security at a prespecified price is a
A)put option.
B)call option.
C)naked option.
D)futures option.

Quizplus · Accepted Answer

A put option gives the purchaser the right to sell the underlying security at a prespecified price, usually during a specific time period. This is in contrast to a call option, which gives the purchaser the right to buy the underlying security at a prespecified price. A naked option refers to an option that is sold without an offsetting position in the underlying security, while a futures option is an option on a futures contract.

Giving the Purchaser the Right to Sell the Underlying Security