The writer of a call option receives the option price(or premium) from the buyer.However, the opposite is true forputs: the writer pays the buyer.

a) True

b) False

The buyer of an American option has less flexibility with respect to the date of exercise than the buyer of an otherwise identical European option.

a) True

b) Flase

You have a short position in the December put option on the shares of Heartless Enterprises Inc. with a strike price of$40. It is an American option. Today Heartless shares are trading for$30 and you want to close your position. What do youdo?

I. Buy a December call option.

II. Exercise your option.

III. Buy a December put option.

a) II only

b) III only

c) II or III

d) I only

e) I or II

For this one I believe it is b) III only but I want to confirm.

I would like an explanation, thank you.