Explanation:
Correct answer: True
A put-on-a-call is the option to sell a call option at the first exercise date.
If the long holder exercises the compound option at the first date, they are effectively giving up the call option position rather than gaining a second-stage exercise right.
Therefore, the long holder does not retain an exercise right on the second exercise date. The second exercise right belongs to the holder of the underlying call option, not to the long put-on-call holder.
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Q-13.3. P2.T5.13. Compound options. In regard to compound options is each the following TRUE or FALSE? The buyer (long the compound option) of a put-on-a-call compound option cannot hold an exercise right on the second exercise date.
A
True
B
False