Which of the following statements about exchange-traded options is NOT true?

The correct statement about exchange-traded options is that they are settled on the next business day, which corresponds to the T + 1 settlement standard. This means that once an option is exercised or expires, the resulting transactions will be processed the following business day.

Settlement on T + 1 aligns with standard industry practices for many derivatives, facilitating quicker access to funds and reducing credit risk between the parties involved. Conversely, the notion that they are settled on the second business day (T + 2) is not representative of how exchange-traded options function, making it the incorrect statement in this context.

Additionally, other elements of exchange-traded options, such as the standardization of contract sizes and position limits imposed on clients, are accurate features of these financial instruments. Standardization ensures uniformity across contracts, making them easier to trade, while position limits help manage risk and promote fair trading practices.