An option which gives the holder the right to sell a stock at a specified price at some time in the future is called a

[amp_mcq option1=”naked option” option2=”call option” option3=”out of the money option” option4=”put option” correct=”option4″]

The correct answer is D. put option.

A put option is a contract that gives the buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a specified price on or before a specified date. The seller of the put option, also known as the option writer, is obligated to buy the asset at the specified price if the buyer exercises the option.

Put options are often used as a hedge against a decline in the price of an asset. For example, if you own shares of a stock, you could buy put options on that stock to protect yourself from a decline in the stock price. If the stock price does decline, you could exercise your put options and sell the stock at the specified price, even if the market price of the stock is lower.

Put options can also be used as a speculative investment. If you believe that the price of an asset is going to decline, you could buy put options in the hope of making a profit. If the price of the asset does decline, you could sell your put options for a profit.

Here is a brief explanation of each option:

• A naked option is an option that is not covered by the underlying asset. This means that the option writer does not own the asset that is being sold. Naked options are considered to be high-risk investments.
• A call option is a contract that gives the buyer the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price on or before a specified date. The seller of the call option, also known as the option writer, is obligated to sell the asset at the specified price if the buyer exercises the option.
• An out of the money option is an option that is not in the money. This means that the strike price of the option is higher than the market price of the underlying asset for a call option, or lower than the market price of the underlying asset for a put option. Out of the money options are typically not worth very much.

I hope this helps!