SIE practice questioneasyOptions — OCC Role
The Options Clearing Corporation (OCC) serves as:
- AThe exchange where options are traded
- BThe issuer and guarantor of all listed options contracts✓ Correct answer
- CAn advisory body that recommends options strategies to investors
- DThe regulator that sets option premium prices
Explanation
Why B — The issuer and guarantor of all listed options contracts
The OCC is the issuer and guarantor of all listed options contracts. When an option is exercised, the OCC ensures the terms of the contract are fulfilled. It acts as the counterparty to both the buyer and seller, virtually eliminating counterparty risk. The OCC does not set prices (C) — premiums are determined by the market. Exchanges (A) like Cboe handle the actual trading.
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