Final answer:
The S&P 100 Index option is index-based and traded on options exchanges, with choice A being the correct answer. It allows for trading based on the collective performance of the market's largest companies, represented by the index.
Step-by-step explanation:
The correct answer to the question regarding the S&P 100 Index option is index-based and traded on options exchanges. This means that the correct choice is A) index, options exchanges. The S&P 100 Index option tracks a selection of the largest companies listed on stock exchanges and represents their performance as a single numerical value. Investors can trade S&P 100 Index options to speculate on the overall movement of the stock market or to hedge their portfolios against market volatility.
Indices like the S&P 500 and the Dow Jones Industrial Average serve as broad stock market measures and demonstrate the overall trend in the stock market, which is typically up over time despite occasional dips. The S&P 500 Index specifically is a weighted average market capitalization of the companies selected for the index, while the Dow Jones Industrial Average is a price-weighted average of 30 industrial stocks.