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Question 1 of 10
1. Question
On which of the following exchanges options are traded?
I. American Stock Exchange (Amex)
II. Chicago Board Options Exchange (CBOE)
III. New York Stock Exchange (NYSE)
IV. Pacific Stock Exchange (PSE)Correct
Options are traded on the following exchanges:
•American Stock Exchange (Amex)
•Chicago Board Options Exchange (CBOE)
•New York Stock Exchange (NYSE)
•Pacific Stock Exchange (PSE)
•Philadelphia Stock Exchange (PHLX)Incorrect
Options are traded on the following exchanges:
•American Stock Exchange (Amex)
•Chicago Board Options Exchange (CBOE)
•New York Stock Exchange (NYSE)
•Pacific Stock Exchange (PSE)
•Philadelphia Stock Exchange (PHLX) -
Question 2 of 10
2. Question
Stephen bought 100 shares of ABC stock at $100 a share. He decides to sell 1 ABC Oct 110 call at 5. He held this position for two months and sold his ABC stock at 109. He closed the ABC Oct 110 call at 4. His gain is-
Correct
To calculate her gain or loss, go through each of the purchases and sales step-by- step. First, she spent $10,000 on ABC stock. She collected a premium for the call she sold, which was $500, reducing her expense to $9,500. She then sold her stock for $10,900, gaining $1,400. To close out the calls she sold, she had to spend $400 to buy closing purchase call. This leaves her gain at $1,000.
Incorrect
To calculate her gain or loss, go through each of the purchases and sales step-by- step. First, she spent $10,000 on ABC stock. She collected a premium for the call she sold, which was $500, reducing her expense to $9,500. She then sold her stock for $10,900, gaining $1,400. To close out the calls she sold, she had to spend $400 to buy closing purchase call. This leaves her gain at $1,000.
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Question 3 of 10
3. Question
When an investor first buys a call or put, this is called a(an)-
Correct
When an investor first buys a call or put, this is called an opening purchase.
Incorrect
When an investor first buys a call or put, this is called an opening purchase.
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Question 4 of 10
4. Question
How to calculate break-even for selling a put:
Correct
How to calculate break-even for selling a put: Break-even = strike price – premium
Incorrect
How to calculate break-even for selling a put: Break-even = strike price – premium
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Question 5 of 10
5. Question
Which is (are) the following statement(s) true about Call option?
I. Calls are options that give the holder or buyer the right to buy the security at a certain price where the seller is obligated to sell at that price.
II. The buyer of a call option is betting on the stock’s price is increasing whereas the seller is betting that the stock will decrease.
III. Calls are options that give the holder or buyer the right to buy the security at a certain price where the buyer is obligated to buy at that price.
IV. The buyer of a call option is betting on the stock’s price is increasing whereas the buyer is betting that the stock will decrease.Correct
Calls are options that give the holder or buyer the right to buy the security at a certain price, where the seller is obligated to sell at that price. The buyer of a call option is betting on the stock’s price is increasing, whereas the seller is betting that the stock will decrease.
Incorrect
Calls are options that give the holder or buyer the right to buy the security at a certain price, where the seller is obligated to sell at that price. The buyer of a call option is betting on the stock’s price is increasing, whereas the seller is betting that the stock will decrease.
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Question 6 of 10
6. Question
Where will the public order go, if an order cannot be executed immediately due to market conditions?
Correct
If an order cannot be executed immediately due to market conditions, the public order will go to the order book official (OBO).
Incorrect
If an order cannot be executed immediately due to market conditions, the public order will go to the order book official (OBO).
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Question 7 of 10
7. Question
Which is (are) the following statement(s) true about buyer and sellers of call and put option?
I. Buyers of calls are bullish
II. Sellers of calls are bearish
III. Buyers of puts are bearish
IV. Sellers of puts are bullishCorrect
Buyers of calls are bullish, sellers of calls are bearish. Buyers of puts are bearish, sellers of puts are bullish.
Incorrect
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Question 8 of 10
8. Question
Which is (are) the following statement(s) true about In-the-money?
I. In-the-money is when an option is profitable for the holder.
II. For a call, it means the stock is trading higher than the strike price.
III. For a put, it means the stock is trading lower than the strike price.
IV. If an option is trading in-the-money, it has no intrinsic value.Correct
In-the-money: when an option is profitable for the holder. For a call, it means the stock is trading higher than the strike price; for a put, it means the stock is trading lower than the strike price. If an option is trading in-the money, it has intrinsic value, meaning there is a profit to be made if the option isexercised.
Incorrect
In-the-money: when an option is profitable for the holder. For a call, it means the stock is trading higher than the strike price; for a put, it means the stock is trading lower than the strike price. If an option is trading in-the money, it has intrinsic value, meaning there is a profit to be made if the option isexercised.
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Question 9 of 10
9. Question
What does At-the-money mean?
Correct
At-the-money: when an option’s strike price and the stock market price are the same.
Incorrect
At-the-money: when an option’s strike price and the stock market price are the same.
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Question 10 of 10
10. Question
Which is (are) the following statement(s) true about Out-of-the-money?
I. For a put, it means a stock is trading lower than the strike price.
II. For a call, it means the stock is trading lower than the exercise price
III. For a put, it means a stock is trading higher than the strike price.
IV. For a call, it means the stock is trading higher than the exercise priceCorrect
Out-of-the-money: when an option is not profitable for the holder. For a call, it means the stock is trading lower than the exercise price; for a put, it means a stock is trading higher than the strike price.
Incorrect
Out-of-the-money: when an option is not profitable for the holder. For a call, it means the stock is trading lower than the exercise price; for a put, it means a stock is trading higher than the strike price.