When a stock index call option is exercised, what must the writer do?

When a stock index call option is exercised, the writer must deliver cash. This is because stock index options are cash-settled rather than physically settled. When the holder exercises the option, the writer pays the holder the difference between the index level and the strike price of the option, multiplied by the contract size. This means that instead of delivering actual shares, the writer compensates the option holder with cash equivalent to the intrinsic value of the option at the time of exercise. This method simplifies the transaction, as it avoids the logistics and complexities associated with transferring ownership of the underlying stocks.