Chapter 04 · Section 4.1

Automated Exchanges

Which of the following is generally understood to be an automated option exchange?

a) An exchange on which premiums are determined by computer.
No. The option premium is determined by the market, not the computer.
b) An exchange on which bids and asks are entered by the market participants into a computer and visibly displayed.
c) An exchange on which a computer matches buy and sell orders and quotes.