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Which of the following is not specified by a stock option contract? contract settlement procedure contract...

Which of the following is not specified by a stock option contract?

contract settlement procedure
contract size
price of the underlying stock
exercise price
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Answer #1

Price of the underlying stock

An options contract is a contract between two parties to buy or sell an underlying asset at a preset price called the strike price, before the expiration date. The manner in which the contract is settled is specified and so is the size of the contract. The exercise price of the option is preset. The exercise of the contract depends upon the price of the stock at the point of expiration. This value is unknown and hence cannot be specified in the contract.

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