S&P 500 stock index options are settled:
A) in cash.
B) with a portfolio of stocks.
C) with Spyders.
D) in one of the above methods at the discretion of the option owner.
E) None of the above.

Question

Quizplus · Accepted Answer

S&P 500 stock index options are settled in cash, meaning the option holder receives a cash payment equal to the difference between the strike (exercise) price and the S&P 500 index value at expiration. This is the most common settlement method for index options.

S&P 500 Stock Index Options Are Settled