[question removed by admin]
Answer is C. The explaination is that it is not an options contract because the holder of an option contract does not have the obligation but only the right. But it never mentions that Allen ‘buys’ the contract. ‘Entering’ a contract can also mean ‘selling a put’ which would obligate himto buy the asset at a future date. So is option B also correct?
Suggestions please?
I think if he was ‘selling a put’ the word “enter” would probably not be used here. They would be more specific than that and say that he was taking the short position or something along those lines.
And generally if you are “entering a contract” this infers that the contract already exists i.e. you are agreeing to something already proposed. If you are selling a put you are creating a contract, not entering an already existing one.