If you buy an option to buy 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

DWhen you buy a call option, you have the right to buy the underlying asset at the strike price. If the market price at expiration is higher than the strike price (115 > 110), the call option will be exercised because it's profitable to buy at 110 and sell at 115. Conversely, a put option gives the right to sell at the strike price, but since the market price is higher, there's no incentive to exercise the put, so it will not be exercised.

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