Answer:
A. The price must be paid in full
Explanation:
Derivatives refer to securities whose value is derived or based upon the rise and fall in the value of the underlying asset. For example, commodity derivatives.
An option refers to a derivative instrument whereby the buyer purchases the right and not the obligation, to purchase or sell a security at a pre determined price, referred to as exercise price. at a future date.
For purchasing an option, the buyer is charged a premium referred to as option premium. A call buyer purchases the right to call (buy) whereas a put buyer purchases the right to sell at a later date at an exercise price.
In case of options, only the net profit/loss is actually paid/received. While purchasing a six month option, the purchase price is to be paid in full at the time of entering the contract.
