Question

Which of the following parties to an option contract on a company's shares is obligated to buy shares at the option exercise price if the option is exercised? A. Call buyerB. Put sellerC. Put buyerD. Call seller

Answer 1

Answer:

Option B (Put seller) is the appropriate alternative.

Explanation:

• Put seller relates to the practice including its opportunity to then be implemented. That whenever a put application is approved, this same writer typically takes the equality of opportunity at either the strike amount from the lengthy put grabber.
• Writing possibilities seems to be an opportunity for investors. That being said, the earnings from composing the given opportunity would be constrained to either the premium, although the put buyer could keep going to create revenue or gains until another inventory would be zero.

Some other three situations do not relate to either the type of situation in question. So there is one that is the appropriate one.