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Question 1 of 10
1. Question
Which of the following statements is true regarding long put vs. short futures?
Correct
Long put vs. short futures
A long put will continue to gain value as the market price falls beyond the strike price. There is no downside risk other than the cost of the premium. A short future will gain value immediately as the price falls, but is also exposed to continuing losses at any point above the market price at inception
Incorrect
Long put vs. short futures
A long put will continue to gain value as the market price falls beyond the strike price. There is no downside risk other than the cost of the premium. A short future will gain value immediately as the price falls, but is also exposed to continuing losses at any point above the market price at inception
Question 2 of 10
2. Question
Regarding long put vs. short futures, which of the following statements is true?
Correct
Long put vs. short futures
A long put will continue to gain value as the market price falls beyond the strike price. There is no downside risk other than the cost of the premium. A short future will gain value immediately as the price falls, but is also exposed to continuing losses at any point above the market price at inception
Incorrect
Long put vs. short futures
A long put will continue to gain value as the market price falls beyond the strike price. There is no downside risk other than the cost of the premium. A short future will gain value immediately as the price falls, but is also exposed to continuing losses at any point above the market price at inception
Question 3 of 10
3. Question
From the statements below regarding long call vs. long futures, which one seems to be the most appropriate to you?
Correct
Long call vs. long futures
A long call will continue to gain value as the market price rises beyond the strike price. There is no downside risk other than the cost of the premium. A long future will gain value immediately as the price rises, but is also exposed to continuing losses at any point below the market price at inception.
Incorrect
Long call vs. long futures
A long call will continue to gain value as the market price rises beyond the strike price. There is no downside risk other than the cost of the premium. A long future will gain value immediately as the price rises, but is also exposed to continuing losses at any point below the market price at inception.
Question 4 of 10
4. Question
Which of the following statements is true regarding long call vs. long futures?
Correct
Long call vs. long futures
A long call will continue to gain value as the market price rises beyond the strike price. There is no downside risk other than the cost of the premium. A long future will gain value immediately as the price rises, but is also exposed to continuing losses at any point below the market price at inception.
Incorrect
Long call vs. long futures
A long call will continue to gain value as the market price rises beyond the strike price. There is no downside risk other than the cost of the premium. A long future will gain value immediately as the price rises, but is also exposed to continuing losses at any point below the market price at inception.
Question 5 of 10
5. Question
Which of the following statements is false regarding options and futures once breakeven point is reached?
Correct
Options and futures once breakeven point is reached
The futures position offers unlimited (within the expiry period) upside potential at all prices either above (long) or below (short) the market price at inception. Options also offer unlimited (within the expiry period) upside potential, but only after the strike price is exceeded. The key difference between the two strategies is related to risk. Options can expire worthless if prices move adversely, while futures will experience losses.
Incorrect
Options and futures once breakeven point is reached
The futures position offers unlimited (within the expiry period) upside potential at all prices either above (long) or below (short) the market price at inception. Options also offer unlimited (within the expiry period) upside potential, but only after the strike price is exceeded. The key difference between the two strategies is related to risk. Options can expire worthless if prices move adversely, while futures will experience losses.
Question 6 of 10
6. Question
Regarding options and futures once breakeven point is reached, which of the following statements is true?
Correct
Options and futures once breakeven point is reached
The futures position offers unlimited (within the expiry period) upside potential at all prices either above (long) or below (short) the market price at inception. Options also offer unlimited (within the expiry period) upside potential, but only after the strike price is exceeded. The key difference between the two strategies is related to risk. Options can expire worthless if prices move adversely, while futures will experience losses.
Incorrect
Options and futures once breakeven point is reached
The futures position offers unlimited (within the expiry period) upside potential at all prices either above (long) or below (short) the market price at inception. Options also offer unlimited (within the expiry period) upside potential, but only after the strike price is exceeded. The key difference between the two strategies is related to risk. Options can expire worthless if prices move adversely, while futures will experience losses.
Question 7 of 10
7. Question
From the statements below regarding long call and long futures, which one seems to be the most appropriate to you?
Correct
Long call and long futures
As hedges, both a long call and a long futures seek to protect the underlying short position, meaning there is a need to acquire the underlying commodity at the best price. A call will gain value at any price above the strike price; downside loss is limited to the premium paid. A futures will gain value at any price above market at inception; downside loss is incurred at any price below inception, and also includes commissions and margin.
Incorrect
Long call and long futures
As hedges, both a long call and a long futures seek to protect the underlying short position, meaning there is a need to acquire the underlying commodity at the best price. A call will gain value at any price above the strike price; downside loss is limited to the premium paid. A futures will gain value at any price above market at inception; downside loss is incurred at any price below inception, and also includes commissions and margin.
Question 8 of 10
8. Question
Which of the following statements is false regarding long call and long futures?
Correct
Long call and long futures
As hedges, both a long call and a long futures seek to protect the underlying short position, meaning there is a need to acquire the underlying commodity at the best price. A call will gain value at any price above the strike price; downside loss is limited to the premium paid. A futures will gain value at any price above market at inception; downside loss is incurred at any price below inception, and also includes commissions and margin.
Incorrect
Long call and long futures
As hedges, both a long call and a long futures seek to protect the underlying short position, meaning there is a need to acquire the underlying commodity at the best price. A call will gain value at any price above the strike price; downside loss is limited to the premium paid. A futures will gain value at any price above market at inception; downside loss is incurred at any price below inception, and also includes commissions and margin.
Question 9 of 10
9. Question
Regarding long call and long futures, which of the following statements is false?
Correct
Long call and long futures
The table below shows the profitability, ROI, and breakeven point for a long call and a long futures in various pricing scenarios. Note that there are continuing losses for futures as prices fall, while the maximum loss for a call is limited to the premium.
Incorrect
Long call and long futures
The table below shows the profitability, ROI, and breakeven point for a long call and a long futures in various pricing scenarios. Note that there are continuing losses for futures as prices fall, while the maximum loss for a call is limited to the premium.
Question 10 of 10
10. Question
Which of the following statements is true regarding long put and short futures?
Correct
Long put and short futures
As hedges, both a long put and a short futures seek to protect an underlying long position from a decline in prices. A long put will gain value at any price below the strike price; the downside risk is limited to the premium paid. A short futures will gain value at any price below the market price at inception; downside loss is incurred at any price above the market, and also includes commissions and margin.
Incorrect
Long put and short futures
As hedges, both a long put and a short futures seek to protect an underlying long position from a decline in prices. A long put will gain value at any price below the strike price; the downside risk is limited to the premium paid. A short futures will gain value at any price below the market price at inception; downside loss is incurred at any price above the market, and also includes commissions and margin.
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