Which of the following statements is true of the writer of a listed equity call option?
A.
They have the right to sell stock at a fixed strike price.
B.
They have the right to buy stock at a fixed strike price.
C.
They have the obligation to sell stock at a fixed strike price.
D.
They have the obligation to buy stock at a fixed strike price.
The Answer Is:
C
This question includes an explanation.
Explanation:
Step by Step Explanation:
Call Option Writer: When writing (selling) a call option, the writer has the obligation to sell the underlying stock at the strike price if the buyer exercises the option.
Incorrect Options:
A & B: Only the option buyer has rights, not the writer.
D: Obligations to buy stock apply to put option writers, not call option writers.