Explanation:
Correct answer: True
If the long holder of a put-on-a-call exercises the compound option, the short seller is on the other side of that transaction and may end up holding the call option.
So the short compound-option position can indeed result in ownership of the underlying call option.
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Q-13.4. P2.T5.13. Compound options. In regard to compound options is each the following TRUE or FALSE? The seller (short the compound option) of a put-on-a-call compound option may end up holding a call option.
A
True
B
False