In Regards to the Mechanics of Trading Futures Options, Which

question 62

Multiple Choice

In regards to the mechanics of trading futures options, which of the below statements is FALSE?

• A) Upon exercise, the futures price for the futures contract will be set equal to the exercise price and the position of the two parties is then immediately marked to market based on the then-current futures price.
• B) Upon exercise, the option writer or seller must pay the option buyer the economic benefit from exercising.
• C) In the case of a call futures option, the option writer must pay the difference between the current futures price and the exercise price to the buyer of the option.
• D) In the case of a put futures option, the option buyer must pay the option writer or seller the difference between the exercise price and the current futures price.

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Definitions:

Patronizing Casinos

The act of visiting casinos to gamble, which can contribute to local economies but also raise concerns about promoting gambling addiction.

American Tourists

Individuals from the United States who travel to other countries for leisure, adventure, or cultural exploration.

Prohibition

A period in American history (1920-1933) characterized by the legal ban on the manufacture, transportation, and sale of alcohol.

Warren G Harding

The 29th President of the United States (1921-1923), whose term was marked by scandals such as the Teapot Dome scandal, although he also sought peace and prosperity post-World War I.