An option that grants the right,but not the obligation,to sell shares of the underlying asset during a particular time period at a specified price is called:
A)either an American or a European option.
B)an American call option.
C)an American put option.
D)a European put option.
E)a European call option.

Question

Quizplus · Accepted Answer

The option described in the question is a put option, which grants the right to sell shares at a specified price within a certain time frame. Additionally, it is an American option because the holder has the flexibility to exercise the option at any time prior to expiration, as opposed to European options which can only be exercised on the expiration date. Therefore, the correct choice is C, an American put option.

An Option That Grants the Right,but Not the Obligation,to Sell