Options differ from other derivatives because the holder does not have to settle the contract if they choose not to.

Name: Options differ from other derivatives because the holder does not have to settle the contract if they choose not to.
Brand: Quizplus
Rating: 4.7 (49 reviews)

Question

Quizplus · Accepted Answer

Options provide the holder with the right, but not the obligation, to buy or sell the underlying asset at a certain price and time. Therefore, the holder has the option to choose not to exercise the contract and is not required to settle it.

Options Differ from Other Derivatives Because the Holder Does Not