An option whose underlying is the performance of a stock index. The value of this option (whether a call or put) tends to rise and fall as the underlying index rises or falls. More specifically, the underlying of an equity index option is a number of shares of a specific stock index. However, cash-settled index options do not relate to a specific number of shares. Rather, the underlying of a cash-settled index option is usually the value of the underlying index times a multiplier (generally U.S. $100).
The equity index option is also known as a stock index option.
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