Exercise Settlement Amount

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Exercise settlement amount

The difference between the exercise price of the option and the exercise settlement value of the index on the day an exercise notice is tendered, multiplied by the index multiplier.

The amount that the writer (for a call) or the holder (for a put) of an index option is paid if the option is exercised. Because one cannot actually transfer an index, these options are subject to cash settlement for the exercise settlement amount. It is calculated as the difference between the strike price and the aggregate price of the index on the day the option is exercised with the quantity multiplied by the index multiplier.

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