Options Trading Options Trading Strategy Test 5

Question 1

A collar combines owning stock, buying a put, and:

Accepted Answer

Selling a call

Answer

Buying a call

Answer

Shorting stock

Answer

Selling a put

Question 2

Gamma measures the rate of change of which Greek?

Accepted Answer

Delta

Answer

Theta

Answer

Vega

Answer

Rho

Question 3

A long call butterfly profits most when the stock at expiration is:

Accepted Answer

At the middle strike

Answer

Far above the highest strike

Answer

Far below the lowest strike

Answer

Highly volatile

Question 4

Which strategy carries theoretically unlimited risk?

Accepted Answer

Naked short call

Answer

Long put

Answer

Covered call

Answer

Bull call spread

Question 5

The intrinsic value of a call option is:

Accepted Answer

Stock price minus strike, if positive

Answer

Premium minus time value

Answer

Strike minus stock price

Answer

Always zero

Question 6

A diagonal spread differs from a calendar spread because it uses:

Accepted Answer

Different strikes and different expirations

Answer

The same strike and expiration

Answer

Only one option

Answer

Two stocks

Question 7

Selling premium tends to be most attractive when implied volatility is:

Accepted Answer

Elevated relative to history

Answer

Very low

Answer

Exactly zero

Answer

Equal to delta