Delivery and Settlement Flashcards
Taking into account offsetting position, as a contract approaches delivery, which of the following types of margin is triggered?
Spot month margin
Which of the following is a suitable settlement method for a contract for difference?
Cash
In relation to a holder deciding to exercise an option, which of the following would occur first?
The broker completes an exercise notice and forwards it to the clearing house
On ICE Futures, when is the last notice day for the trading of the long UK government future?
The end of the last trading day
Which of the following can initiate an assignment notice?
The holders of put and call options
Who pays the invoice amount?
The long pays it to the clearing house
A far out-of-the-money option is likely to:
To the customer with the largest short-position
A warrant on LME:
Gives right of possession to a specific lot of deliverable metal
If a member of a clearing house has elected for automatic exercise, how would they prevent the exercise of a particular option?
Suppression notice
Once a salesman has confirmed details of a trade to a client, what happens next?
The trade details automatically appear in the exchange settlement system
Who issues an assignment notice when an option is exercised?
The clearing house
A future contract where physical delivery of the underlying asset is not practical or possible, is the generic description of:
A contract for difference
At expiry, which of the following is most likely to be exercised automatically?
In-the-money options
Which of the following is an advantage of the automatic exercise system?
Reduce paperwork on expiry
Which of the following choices are available to the writer of a traded option?
To trade out the option by closing their position
Keep the premium if the option is not exercised
