An Investor Who Exercises a Call Option on an Index

question 65

Multiple Choice

An investor who exercises a call option on an index must

• A) accept the cash difference between the index and the exercise price
• B) purchase all of the stocks in the index in their appropriate proportions from the writer
• C) immediately buy a put option to offset the call option
• D) immediately write another call option to offset
• E) none of the above