A. A six-month S&P 500 index call option has an exercise price of 1,500. The holder of the option exercises the call when the index is at 1,520. The settlement procedure for the S&P 500 index option requires the writer of the option to ____________ to the holder of the option. a. deliver an S&P 500 index ETF b. make a payment of 20 times $100 c. make a payment of $1,520 d. make a payment of 1,520 times $10

B. An investor buys a three-month XCEL call option contract for a premium of $4 per share. The exercise price is $20. The current price of XCEL stock is $23 per share. The investor holds the option until the expiration date when XCEL stock sells for $25 per share. What is the rate of return for this investment? a. 0% b. 25% c. 50% d. 100%

C. In order to guarantee option contract performance, the Option Clearing Corporation (OCC) ______________. a. requires option holders, but not option writers, to post margin b. allows writers of put options to satisfy margin requirements by holding the underlying stock in a brokerage account c. requires increased margin from the writer of in-the-money options compared to out-ofthe- money options d. all of the above statements are true about option margin requirements