Options Trading Millionaires Test

Question 1

Assume Nifty is at 4450 on April 27.
Mr.
Charles, an investor, engages in a short straddle by selling a May 4500 Nifty call for 122 rupees and a May 4500 Nifty put for 85 rupees.
What will Mr.
Charles' net profit be if the Nifty closes at 5000?

Accepted Answer

-293

Answer

0

Answer

93

Answer

Unlimited

Question 2

Assume that in May, Nifty stands at 4500. Mr. Niel, an investor, executed a short strangle by selling a Rs. 7000 Nifty call for Rs. 43 and a Rs. 4300 Nifty point for Rs. 23 in premium. Give Mr. Neil's break-even point.

Accepted Answer

4766, 4234

Answer

4500, 4210

Answer

4710, 4821

Answer

4560, 4300

Question 3

Which markets are a short call condor appropriate for?

Accepted Answer

Highly volatile markets

Answer

Bearish only markets

Answer

Low volatility markets

Answer

All of the options are correct

Question 4

Mr. John shorts ABC Ltd. and invests the same amount in call options on the company. He has come up with a ________ plan.

Accepted Answer

Protective Call

Answer

Long strangle

Answer

Short straddle

Answer

All of the options are correct

Question 5

The risk with the collar strategy is _________.

Accepted Answer

Limited

Answer

Unlimited

Answer

Limited to premium received on call

Answer

None of the options are correct

Question 6

Indicate whether or not the following is true. "In a short straddle, an investor sells calls and puts with the same maturity but different strike prices on the same stock or index.

Accepted Answer

False

Answer

True

Question 7

What will a call option's intrinsic value be given that it has an underlying deposit of Rs. 100,000, a strike price of 97.5, and an interest rate of 2.5% per annum?

Accepted Answer

None of the options are correct

Answer

Zero

Answer

Positive

Answer

Negative

Assume Nifty is at 4450 on April 27.Mr.Charles, an investor, engages in a short straddle by selling a May 4500 Nifty call for 122 rupees and a May 4500 Nifty put for 85 rupees.What will Mr.Charles' net profit be if the Nifty closes at 5000?

Assume Nifty is at 4450 on April 27.
Mr.
Charles, an investor, engages in a short straddle by selling a May 4500 Nifty call for 122 rupees and a May 4500 Nifty put for 85 rupees.
What will Mr.
Charles' net profit be if the Nifty closes at 5000?