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June 25, 2019
 
 

1) If you buy an option, do you have rights or obligations?

a) Rights
b) Obligations

2) If you sell an option, do you have rights or obligations?

a) Rights
b) Obligations

3) You are long 3 Microsoft August $30 calls. What does this position allow you to do?

a) Right to sell 300 shares of Microsoft for $30 per share
b) Obligation to sell 300 shares of Microsoft for $30 per share
c) Right to buy 300 shares of Microsoft for $30 per share
d) Obligation to buy 300 shares of Microsoft for $30 per share

4) What is the last options trading day for November 2004 options?

a) Friday 5th
b) Friday 12th
c) Friday 19th
d) Friday 26th

5) You are long 7 Intel June $25 puts. What does this position allow you to do?

a) Right to sell 700 shares of Intel for $25 per share
b) Obligation to sell 700 shares of Intel for $25 per share
c) Right to buy 700 shares of Intel for $25 per share
d) Obligation to buy 700 shares of Intel for $25 per share

6) Which entity guarantees the performance of delivery if you should exercise an option?

a) FCC
b) OCO
c) CCO
d) OCC

7) You see a $75 call listed in the newspaper. What two names does the $75 figure go by?

a) Strike price/Exercise Price
b) Exercise price/Call Price
c) Buy Price/Sell Price
d) Strike Price/Lock Price

8) A call option is trading for $6.50. What is the technical term for this $6.50 price?

a) Time Premium
b) Cost
c) Price
d) Premium

9) You decide to buy 4 $30 calls at $2 each. What will be the total cost of the trade not counting commissions?

a) $2,000
b) $8,000
c) $200
d) $800

10) Assuming they represent the same underlying stock, which call option is more expensive, the August $75 call or the August $80 call?

a) August $75
b) August $80
c) It could be either depending on how the market values them
d) Cannot be determined

11) Assuming they represent the same underlying stock, which option is more expensive, the July $75 call or the September $75 call?

a) July $75
b) September $75
c) It could be either depending on how the market values them
d) Cannot be determined

12) Long call option holders have the right to:

a) Vote the proxy of the underlying stock
b) Assign the option
c) Exercise the option
d) Collect dividends

13) The underlying stock is trading for $100. Which option is in-the-money?

a) $100 put
b) $95 put
c) $105 call
d) $95 call

14) The underlying stock is trading for $75. Which option is in-the-money?

a) $70 put
b) $80 put
c) $80 call
d) $75 call

15) The underlying stock is trading for $50 and the $45 call is trading for $6. What are the intrinsic and time values?

a) $1 intrinsic, $5 time
b) $5 intrinsic, $1 time
c) $6 time, $0 intrinsic
d) $6 intrinsic, $0 time

16) At expiration, all options are worth one of two values. What are they?

a) $0 or time value
b) $0 or intrinsic value
c) Strike price or stock price
d) Premium or strike price

17) If you wish to close your long call option prior to expiration, you should:

a) Assign it
b) Sell it in the open market
c) Exercise it
d) Buy it in the open market

18) What is the one factor that really gives options their value?

a) Volatility
b) Interest Rates
c) Dividends
d) Exercise Price

19) You find a $50 call with the stock trading for $57. What is the minimum the $50 call should be worth?

a) $7
b) $5
c) $1
d) There is no minimum

20) You find a $100 put with the stock trading for $94. What is the minimum the $100 put should be worth?

a) $2
b) $3
c) $5
d) $6

21) You wish to buy 2,000 shares of Microsoft but do not have the money. How could you control 2,000 shares for less money?

a) Buy 20 call options
b) Buy 2 call options
c) Buy 200 call options
d) Sell 20 call options

22) You own 300 shares of Merck, which is trading for $45. They are due to release an earnings report in two weeks and you're concerned that the stock may fall. How can you protect your shares?

a) Buy three call options
b) Buy three put options
c) Sell three call options
d) Sell three put options

23) You are short 500 shares of Intel at $25. How can you protect yourself from the upside risk above $30?

a) Buy five $30 call options
b) Buy five $25 put options
c) Sell five $30 call options
d) Sell five $25 put options

24) You own 200 shares of stock at $40. If you sell two $45 call options, what is this position called? What right or obligation do you have?

a) Naked call, obligation to sell stock
b) Long call, obligation to buy stock
c) Covered call, right to sell stock
d) Covered call, obligation to sell stock

25) When you trade options:

a) You must buy the underlying stock at some time
b) You must sell the underlying stock at some time
c) You are not required to ever trade the stock
d) You must own the underlying stock before you trade


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