Series 6 - Investment Company And Variable Contracts Products Representative Exam

Preview Mode

When an investor buys a call option, she has the______________ to buy the underlying security, but does not have the _____________ to buy the underlying security.

Right / Obligation
A
Obligation / Right
B
Option / Obligation
C
Obligation / Option
D

Explanations

The buyer of the call option is purchasing the right, but not the obligation to purchase the underlying security at a specified price (strike price) on or before the call option's expiration.

Pricing