If the buyer of the futures option exercises, the futures price for the futures contract will be set equal to the exercise price, but the position of the two parties is then immediately marked to market based on the then-current futures price.

Question

Quizplus · Accepted Answer

This statement is true. When the buyer exercises a futures option, the futures price is set equal to the exercise price, but the position is immediately marked to market based on the current futures price. This means that any gains or losses since the option was purchased will be settled and the new position is based on the current market value of the futures contract.

If the Buyer of the Futures Option Exercises, the Futures