Which of the following is true about a futures option and a spot option on the same underlying asset with an identical strike price and expiration date?
A) A European call spot option and an American call futures option are equivalent
B) An American call spot option and a European call futures option are equivalent
C) A European put spot option and European put futures option are equivalent
D) An American put spot option and American put futures option are equivalent

Question

Quizplus · Accepted Answer

European put options on spot and futures are equivalent due to the cost-of-carry model, which aligns their pricing when considering the present value of the strike price and the futures price.

Which of the Following Is True About a Futures Option