
Answer-first summary for fast verification
Answer: TRUE
**TRUE.** If, on the first exercise date, the call is worth less than the initial strike price, the buyer delivers the call in exchange for the strike price. In that case, the counterparty holds the call on the second exercise date, and the original buyer no longer has an exercise right. If the compound option is not exercised on the first date, the call never comes into existence.
Author: Manit Arora
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