Applied Knowledge & Practice Flashcards
7 cards from real Series 3 – The National Commodities Futures Test practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Applied Knowledge & Practice flashcards as text
What is the maximum loss for the buyer of a futures call option?
Answer: The premium paid
A long option holder can lose no more than the premium paid.
A crude oil call with a $70 strike is bought for a $2 premium. What is the breakeven at expiration?
Answer: $72
Call breakeven equals strike plus premium.
An S&P put has a 1,000 strike and a 30-point premium. What is the buyer's breakeven?
Answer: 970
Put breakeven equals strike minus premium.
A call has a 65 strike and the underlying futures trade at 68. What is its intrinsic value?
Answer: 3
Intrinsic value of a call is futures price minus strike, here 3.
What is the risk to the writer of an uncovered call?
Answer: Theoretically unlimited
If the underlying rises sharply, the short call loses without a cap.
A holder exercises a call option on a futures contract. What position results?
Answer: Long futures at the strike price
Exercising a call on a future creates a long futures position at the strike.
Which option generally has the greatest time value?
Answer: At-the-money
Time value is highest for at-the-money options because uncertainty is greatest there.
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Sources & references
Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy
- finra.org — Score release, test dates, test delivery, fees, exam format, passing score · verified Oct 2026
- nfa.futures.org — Eligibility, score validity · verified Oct 2026