What Is the Cash Component of the Payoff If a Call

question 3

Multiple Choice

What is the cash component of the payoff if a call futures option on 50 units of the underlying asset is exercised?

• A) (Current Futures Price - Strike Price) times 50
• B) (Strike Price - Current Futures Price) times 50
• C) (Most Recent Futures Settlement Price - Strike Price) times 50
• D) (Strike Price - Most Recent Futures Settlement Price) times 50

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Definitions:

Hydrograph

A graph showing the rate of flow (discharge) versus time past a specific point in a river, or other channel or conduit carrying flow.

Summer Thunderstorm

A weather phenomenon characterized by heavy rainfall, lightning, thunder, and occasionally hail, frequently occurring in the summer.

Steady Light Rain

A continuous and uniform precipitation with relatively low intensity, typically not leading to significant flooding.

River's Flow

The movement of water in a river channel as it travels from the headwaters to the mouth, influenced by gravity and landscape.