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Exercise settlement amount

The difference between the settlement value of the index on the day an in-the-money index call option is exercised and the exercise price of the option, or the difference between the exercise price of an in-the-money index put option and the settlement value of the index on the day the option is exercised, times the index multiplier.

(1) Assuming, for example, that an investor purchases a call option on the S&P/TSX 60 Index (SXO), traded on the Montréal Exchange, with an exercise price of 520, and that the settlement value of the index at expiration (this being a European option) is 570, the exercise settlement amount (to be cashed by the investor) will total $5,000, i.e. (570-520) x $100. (2) The exercise settlement amount is paid by the assigned option writer and received by the holder exercising its option.