Strategic Planning & Analysis 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 Strategic Planning & Analysis flashcards as text
What is the maximum loss for the buyer of a crude oil call option?
Answer: The premium paid
A long option buyer risks only the premium paid.
A trader buys a futures put with a strike of 70 for a premium of 2. What is the breakeven at expiration?
Answer: 68
Put breakeven equals the strike minus the premium: 70 - 2 = 68.
A trader holding a long futures position sells a call against it. What is this strategy, and what is its main trade-off?
Answer: Covered call; upside is capped in exchange for premium income
Selling a call against long futures earns premium but caps profit above the strike.
A trader buys a call and a put with the same strike and expiration. What outcome does this long straddle seek?
Answer: A large price move in either direction
A long straddle profits when price moves far enough in either direction to exceed total premium paid.
A trader buys a 70 put and sells a 65 put on the same futures and expiration. What is this strategy?
Answer: Bear put spread (debit)
Buying the higher-strike put and selling the lower-strike put creates a debit bear put spread.
Futures trade at 105. A 100-strike call is priced at 7. What are its intrinsic value and time value?
Answer: Intrinsic 5, time 2
Intrinsic value is 105 - 100 = 5, leaving 2 of time value from the 7 premium.
Other factors equal, what happens to an out-of-the-money option's time value as expiration approaches?
Answer: It decays, benefiting the option seller
Time decay erodes option premium as expiration nears, which benefits the seller.
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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