Crypto Trading Binance Options 2 — Questions and Answers
Question 1: What type of options does Binance primarily offer on its main options platform?
- American-style options
- European-style options (Correct answer)
- Bermudan options
- Asian options
Correct answer: European-style options
Binance Options are European-style, meaning they can only be exercised at expiration.
Question 2: On Binance, what does buying a call option give the holder the right to do?
- Sell the underlying at the strike price
- Buy the underlying at the strike price (Correct answer)
- Receive a fixed daily yield
- Short the asset with no expiry
Correct answer: Buy the underlying at the strike price
A call option gives the holder the right to buy the underlying at the strike price.
Question 3: What is the maximum loss for a buyer of a Binance option?
- Unlimited
- The strike price
- The premium paid (Correct answer)
- The notional value
Correct answer: The premium paid
An option buyer can lose at most the premium they paid.
Question 4: Which Greek measures an option's sensitivity to changes in the underlying asset's price?
- Theta
- Vega
- Delta (Correct answer)
- Rho
Correct answer: Delta
Delta measures how much an option's price changes relative to the underlying price.
Question 5: What happens to a Binance European option that expires out-of-the-money?
- It is automatically rolled over
- It expires worthless (Correct answer)
- It converts to a futures position
- It is exercised at a loss
Correct answer: It expires worthless
An out-of-the-money option expires worthless and the buyer loses the premium.
Question 6: In options pricing, what does the term 'strike price' refer to?
- The current market price of the asset
- The fixed price at which the option can be exercised (Correct answer)
- The premium charged by the seller
- The liquidation price of the position
Correct answer: The fixed price at which the option can be exercised
The strike price is the predetermined price at which the option can be exercised.
Question 7: Which factor generally increases the premium of both calls and puts?
- Lower implied volatility
- Higher implied volatility (Correct answer)
- Shorter time to expiry
- A narrower bid-ask spread
Correct answer: Higher implied volatility
Higher implied volatility raises option premiums because larger price swings are more likely.
Crypto Trading Binance Options 2
What type of options does Binance primarily offer on its main options platform?