At maturity, the buyer of a put option must pay the exercise price to the option seller. Select one: True False

To determine whether the statement is true or false, we should understand how put options work.

1. Understanding Put Options: A put option gives the buyer the right, but not the obligation, to sell an underlying asset at a specified exercise price before or at maturity.

2. Buyer’s Obligation: At maturity, if the buyer of a put option decides to exercise the option, they sell the underlying asset to the option seller at the exercise price. The buyer does not pay the exercise price; rather, they receive it in exchange for the asset.

3. Conclusion: The statement implies that the buyer pays the exercise price to the seller, which is incorrect.

Final Answer

False. The buyer of a put option does not pay the exercise price; instead, the buyer has the right to sell the asset at that price.