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
C
When the option is exercised the holder obtains the cash payoff in C and a long futures contract.
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a. True b. False
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