The correct answer is:<\/p>\n\n\n\n
“obliges the holder to exercise it at the expiration date.”<\/strong><\/p>\n\n\n\n An options contract<\/strong> is a financial derivative that gives the holder the right<\/strong>, but not the obligation<\/strong>, to buy or sell an underlying asset at a specified price (called the strike price) on or before a specified expiration date. The key aspect of options is choice<\/strong>\u2014the holder can decide whether or not to exercise the option, depending on whether it is profitable.<\/p>\n\n\n\n There are two main types of options:<\/p>\n\n\n\n Let\u2019s review each statement in the question:<\/p>\n\n\n\n Therefore, the false statement is the one about obligation to exercise<\/strong>, which misrepresents the nature of options.<\/p>\n\n\n\n Which of the following is NOT true. An options contract is a contractual agreement between two parties. is based on the value of an underlying security. obliges the holder to exercise it at the expiration date. gives a trader the right to buy or sell the underlying security. The Correct Answer and Explanation is: The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-26961","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/26961","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=26961"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/26961\/revisions"}],"predecessor-version":[{"id":26970,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/26961\/revisions\/26970"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=26961"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=26961"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=26961"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Explanation<\/h3>\n\n\n\n
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This is true. One party is the buyer (holder) of the option, and the other is the seller (writer) who must fulfill the contract if the option is exercised.<\/li>\n\n\n\n
This is also true. The price and value of the option are derived from an asset like a stock, index, or commodity.<\/li>\n\n\n\n
This is NOT true<\/strong>. The holder has the right<\/strong>, not the obligation, to exercise the option. If exercising is not beneficial (e.g., the option is \u201cout of the money\u201d), the holder can choose to let it expire worthless.<\/li>\n\n\n\n
This is true. The option gives a trader the ability to take action if it is in their favor.<\/li>\n<\/ul>\n\n\n\n![\"\"](\"https:\/\/gaviki.com\/blog\/wp-content\/uploads\/2025\/06\/learnexams-banner8-129.jpeg\")
<\/figure>\n","protected":false},"excerpt":{"rendered":"