Aa Aa 11. Option contracts terms Option Contracts Terminology and Definitions Learning about option contracts includes learning words you're probably familiar with but are being used in new ways to discuss options. Make sure you understand the terminology by answering the following questions: True or False: Shannon holds an option contract written by Paula. Shannon notified Paula that she decided to exercise her option. Paula has the option to refuse to act on Shannon's decision True False True or False: When Shannon bought the option from Paula, she paid Paula a fee called a premium True False True or False: Paula wrote the option and owns the underlying stock. Paula wrote a covered option O False True True or False: Nina holds many options. If she decides to exercise any of them, the transaction will be at a price Nina thinks is fair True False True or Fase: Valentina holds a call option. If she exercises her option, Valentina will sell the optioned asset. False True True or False: Valentina let her option contract expire without exercising the option. The option writer, Paula, profited from the contract while Valentina did not profit from it. False True