Options Trading Strategy Test

Question 1

The maximum return on investment for equity option contracts is :

Accepted Answer

Limited

Answer

Unlimited

Answer

Premium received

Answer

As per investment

Question 2

What impact does a market-to-market contract have?

Accepted Answer

The underlying asset is delivered.

Answer

The agreement is reverted.

Answer

One of the contract's sides breaches the agreement.

Answer

Prices changes in the underlying market are reflected in the contract holder's margin account.

Question 3

What is the intrinsic value of a put option that is in the money?

Accepted Answer

The value of a share less the cost of an exercise.

Answer

Zero.

Answer

The stock price less the exercise price.

Answer

A premium for puts.

Question 4

What is the crucial connection between a futures markets and an observer?

Accepted Answer

The cost of retaining the underlying asset from the time of purchase till delivery, as well as its price.

Answer

The futures price and the underlying instrument's cash price in the future at the delivery location stated in the futures contract.

Answer

The underlying instrument's present value and its future value at the delivery location stated in the contract.

Answer

The cost of keeping the underlying asset from the time of purchase to delivery, as well as the futures price.

Question 5

The identical strike prices are quoted for a stock's three Call series, which are for May, June, and July. Which option premium will be the highest?

Accepted Answer

July

Answer

June

Answer

May

Answer

All will be on an equal footing

Question 6

Another name for "squaring off" is :

Accepted Answer

Leverage

Answer

Opening a position

Answer

Closing a position

Answer

None of the options are correct

Question 7

What is the measurement of the option value's sensitivity to a specific tiny change in the underlying asset's price?

Accepted Answer

Theta

Answer

Gamma

Answer

Chi

Answer

Sigma