The specific price at which a put option buyer has obtained the right to sell is called:

The specific price at which a put option buyer has obtained the right to sell is called:

• A. The strike price
• B. The premium
• C. The basis
• D. The margin

Answer: (A)

Strike price is the fixed price at which a put option holder can sell the underlying asset if they exercise. This price is set when the option is written and does not change with market moves. For a put, if the market price falls below the strike, exercising lets you sell at the strike price, giving intrinsic value equal to strike minus spot (if positive). The option’s total value also includes time value captured by the premium paid to obtain the option, which is separate from the strike price. The premium is the cost to acquire the right, not the price you can sell at. Basis and margin relate to different concepts and do not define the exercise price of a put.

Strike price is the fixed price at which a put option holder can sell the underlying asset if they exercise. This price is set when the option is written and does not change with market moves. For a put, if the market price falls below the strike, exercising lets you sell at the strike price, giving intrinsic value equal to strike minus spot (if positive). The option’s total value also includes time value captured by the premium paid to obtain the option, which is separate from the strike price. The premium is the cost to acquire the right, not the price you can sell at. Basis and margin relate to different concepts and do not define the exercise price of a put.