Options Strategies
When an S&P 500 index call option is exercised, the holder receives:
Index options are cash-settled. Upon exercise, the holder receives cash equal to the intrinsic value (difference between index level and strike price x $100 multiplier). No securities are delivered.
Complete Analysis & Legal Rationale
Index options are cash-settled. Upon exercise, the holder receives cash equal to the intrinsic value (difference between index level and strike price x $100 multiplier). No securities are delivered.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Governs options accounts, approvals, and related supervisory requirements (verify current text).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.