Final answer:
The student's question revolves around options trading, where the correct answer indicates that Nikhil owned an American call option, as he exercised it before expiration and received payment for his shares.
"the correct option is approximately option A"
Step-by-step explanation:
The student's question relates to a type of financial instrument called options, which are contracts that give the buyer the right, but not the obligation, to buy or sell a stock at an agreed-upon price and date. When Nikhil exercised his option on May 12th and received $2,200 in exchange for his shares, this indicates that he executed an option which resulted in him selling his shares. Since the exercise occurred before the expiration date (June), and because he sold shares, it suggests that Nikhil owned an American call option.
American options can be exercised at any time before their expiration date, which makes sense given that he exercised it in May although it's a June option, while European options can only be exercised on the expiration date itself.
On the other hand, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed price until the expiration date and is not typically about selling existing shares.