Answer-first summary for fast verification
Answer: True
**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.
Author: Manit Arora
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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
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