Stock Jobs Stock Trading Strategies 2

Question 1

What is 'short selling' in the stock market?

Accepted Answer

Borrowing shares to sell them, then repurchasing at a lower price for profit

Answer

Short selling involves borrowing shares from a broker, selling them at the current price, and buying them back later at a lower price to profit from the decline.

Question 2

What is a 'covered call' options strategy?

Accepted Answer

Selling call options on stock you already own to generate income

Answer

A covered call involves selling call options on shares you already own, generating premium income while potentially capping upside gains.

Question 3

What is 'arbitrage' in stock trading?

Accepted Answer

Profiting from price differences of the same asset in different markets

Answer

Arbitrage exploits price differences for the same security across different markets or exchanges, buying low in one and selling high in another simultaneously.

Question 4

What does 'going long' mean in stock trading?

Accepted Answer

Buying a security with the expectation its price will rise

Answer

Going long means buying a security with the expectation that its price will increase, allowing you to sell it later at a profit.

Question 5

What is a 'stop-loss order' used for in trading?

Accepted Answer

To automatically sell a security when it drops to a specified price to limit losses

Answer

A stop-loss order automatically triggers a sale when a stock reaches a predetermined price, protecting traders from further losses.

Stock Jobs Practice Test

Stock Jobs Practice Test

Stock Jobs Stock Trading Strategies 2