Final answer:
The statement is true; the Options Clearing Corporation acts as the guarantor for each contract traded on the Chicago Board Options Exchange, ensuring the obligations of the contracts are met.
Step-by-step explanation:
Options Clearing Corporation (OCC) is a United States clearing house based in Chicago. It specializes in equity derivatives clearing, providing central counterparty (CCP) clearing and settlement services to 16 exchanges. Started by Wayne Luthringshausen and carried on by Michael Cahill. Its instruments include options, financial and commodity futures, security futures, and securities lending transactions. True or false: The Options Clearing Corporation (OCC) acts as the guarantor of each Chicago Board Options Exchange (CBOE) traded contract. This statement is true. The OCC is indeed the counterparty to all CBOE trades, which means that they essentially guarantee the fulfillment of every options contract traded on the CBOE.
By performing this role, the OCC ensures that the obligations of the contracts are met, regardless of the default of any party involved. In its role as the guarantor, the OCC mitigates the risk of counterparty default which could potentially harm the efficiency and integrity of the market. This system boosts the confidence of the participants in engaging in options trading, thereby promoting liquidity and stability in the options market.