SIE (Securities Industry Essentials) Practice Exam

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Upon expiration, all in-the-money S&P 100 Index call options are settled by the delivery of:

Cash
Equity Shares
Bond Certificates
Physical Commodities

The correct answer is: Cash

When an option expires, the holder of the option has the right to exercise it and receive its underlying asset. In this case, the underlying asset of the S&P 100 Index call options is the S&P 100 Index itself. However, delivering equity shares, bond certificates, or physical commodities would not make sense because they are not directly related to the S&P 100 Index. Cash is the most appropriate asset to deliver as the value of the option is based on the difference between the strike price and the current value of the S&P 100 Index, which can easily be settled with cash. Therefore, A is the correct answer and B, C, and D are incorrect options.