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2 January, 19:15

If a customer exercises an equity call contract, the customer must: A pay the strike price for the security in next business day B pay the strike price for the security in 2 business days C deliver the security the next business day D deliver the security in 2 business days

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  1. 2 January, 19:42
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    B. pay the strike price for the security in 2 business days

    Explanation:

    A call option confers a right (and not the obligation) on the buyer to buy (call) an underlying asset at a pre determined strike/exercise price at a specified future date.

    A call buyer exercises his option only when it is beneficial to him and his profit is expressed as

    = Current Market Price (CMP) as on expiry - Strike price - Option premium paid

    Once a call buyer exercises his right to call/buy an underlying asset i. e equity stock here, he is required to pay the strike price for the security within 2 business days.
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