What does a buyer receive when a stock index call option is exercised?

When a stock index call option is exercised, the buyer receives cash equal to the difference between the strike price of the option and the current market value of the index. This cash settlement is standard for stock index options because the indexes are not made up of individual stocks that can be physically delivered. Instead, the exercise results in a cash payment that reflects the profitability of the option.

This cash settlement approach allows the buyer to realize the intrinsic value of the option, which is the gain they would have by exercising it. The buyer profits from the option when the market value of the index exceeds the strike price, resulting in a positive cash flow that can be calculated by the difference between these two values.

In contrast, receiving the underlying stocks of the index wouldn't apply since stock index options do not have a deliverable asset in the form of physical shares. Similarly, the choices related to fixed income payments or differences in shares owned do not relate to the mechanics of stock index options under current practices.