SOFA-CFE · Question #113
An option to sell a particular stock at a fixed price within a stated period of time is called:
The correct answer is A. put. A put option gives the holder the right to sell a specific stock at a predetermined (strike) price before expiration - exactly what the question describes. A call option (B) is the opposite: the right to buy a stock at a fixed price, so it's easy to mix these up. A hedge (C) is…
Question
An option to sell a particular stock at a fixed price within a stated period of time is called:
Options
- Aput
- Bcall
- Chedge
- DCapital gain
How the community answered
(51 responses)- A76% (39)
- B2% (1)
- C14% (7)
- D8% (4)
Explanation
A put option gives the holder the right to sell a specific stock at a predetermined (strike) price before expiration - exactly what the question describes. A call option (B) is the opposite: the right to buy a stock at a fixed price, so it's easy to mix these up. A hedge (C) is a broader risk-management strategy, not a specific option type. A capital gain (D) is simply profit from selling an asset at a higher price than purchased - unrelated to options contracts.
Memory tip: Think "P for Put = P for Pass it on (sell it)." Alternatively, put it away = sell it, while call it in = buy it.
Community Discussion
No community discussion yet for this question.