- 1. Assures the financial integrity of the market.
- 2. Matches trades and facilitates the flow and transfer of funds.
- 3. Provides a mechanism for delivery or cash settlement.
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a) always follows delivery; the call holder (put writer) pays the exercise price for the underlying asset.
b) is a substitute for delivery.
c) is only used for options that are not exercised, i.e. offset against each other.