If you buy an option to sell Treasury futures at 110,and at expiration the market price is 115,
A) the call will be exercised.
B) the put will be exercised.
C) the call will not be exercised.
D) the put will not be exercised.

Question

Quizplus · Accepted Answer

The option to sell Treasury futures at 110 is a put option. If the market price is above the strike price, which is the case here as the market price is 115, it is unlikely that the holder of the put option will exercise it as they can sell the futures at a higher price in the market instead. Hence, the put option will not be exercised.

If You Buy an Option to Sell Treasury Futures at 110,and