Final answer:
The false statement about put options is that you buy them when expecting a stock's price to increase. In reality, put options are bought when an investor expects the stock price to decrease, not increase. Option A is correct.
Step-by-step explanation:
The statement regarding put options that is not true is: A) You buy a put option when you expect the stock's price to increase. Put options are financial contracts that give the buyer the right, but not the obligation, to sell a specified amount of an underlying security at a specified price (the strike price) within a certain time period. When an investor expects the stock's price to decrease, they may buy a put option. Conversely, a call option would be purchased if an investor expects the stock's price to increase.
Other statements B) and C) mentioned are characteristic features of options. Statement B) refers to the fact that the mechanism for placing an order for both a put option and a call option is similar, and statement C) correctly notes that put options, just like call options, have an expiration date by which the option must be exercised or it will expire worthless. Statement D) highlights that options, in general, allow an investor to lock in a price for buying or selling an underlying asset.