How does options exercise/assignment work with DJX options?
Although the value of a DJX option is based on the value of the DJIA, investors will not receive stocks, or have to deliver stocks, if the options are exercised. As European-style options, DJX contracts can only be exercised on expiration. Investors holding long positions will receive cash if the option has value at expiration and it is exercised. This is known as cash-settlement. This is a key difference between index and equity options. Equity options can be exercised as a means to buy or sell the underlying stock. The process is different with index options because they are cash-settled. When a DJX option is exercised, the option holder receives the in-the-money amount in cash, and the option writer pays that amount.
Related Questions
- What are the differences between the Applied Kinesiology, the Exercise Science and the Exercise Physiology options within the major?
- How do I switch Options within the major (e.g., from Applied Kinesiology to Exercise Sciecne or Exercise Physiology)?
- How can an investor use DJX options for long-term portfolio management?
