Unit 0: Intro To Covered Options

14 Questions

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Unit 0: Intro To Covered Options

This test is to introduce your knowledge and commitment to learning to sell options


Questions and Answers
  • 1. 
    The definition of ' CASH COVERED PUT ' refers to " You're Agreeing to buy 100 shares of (Ticker) at (Strike) per share on or before (Expiration Date). IF you are not asked to buy (Ticker) by then, you'll keep your collateral and the full ( Premium Received )
    • A. 

      True

    • B. 

      False

  • 2. 
    A SellPut to Aquire [Blank] and a SellCall to sell off [Blank] can both be used simultaneously also know as a strategy called the [Blank]
  • 3. 
    Money TAKEN AWAY before purchasing a SellPut option is referred to as [Blank]
  • 4. 
    What is the strike price?
    • A. 

      A fixed price in which the owner of the option buys/sells

    • B. 

      The stocks underlying value

    • C. 

      The stocks cost per share

    • D. 

      The rate at which you're taxed on potential gains before a one year holding period

  • 5. 
    A SELL PUT for AMC ( CURRENTLY AT 6.98/share PRICE) was purchased on September 12, 2020 You received 400$ of premium, Expiration is on 1/21/22 and the STRIKE PRICE is at 8.00$, Fast forward to January 21, 2022, The stock is trading at 9.00/Share Which scenario is MOST LIKELY to happen.
    • A. 

      You DO NOT get assigned the 100 shares however, you DO NOT get to keep your collateral + 400$ of free premium

    • B. 

      You DO get assigned the 100 shares, however, you get to keep your strike price at 8.00$

    • C. 

      You DO NOT get assigned the 100 shares however, you get to keep your collateral + 400$ of free premium

    • D. 

      You DO get assigned the 100 shares, however, you also still keep  your collateral + 400$ of free premium

  • 6. 
    The wheel strategy involves a BUTPUT and BUYCALL
    • A. 

      True

    • B. 

      False

  • 7. 
    DETERMINE Strike Price Stock Price Premium Received and Expiration for this SELL CALL option
  • 8. 
    A Covered [Blank] refers to agreeing to sell 100 shares of (TICKER) at (STRIKE PRICE) Before or on (EXPIRATION DATE). IF you aren't asked to sell (TICKER) by then, you keep your collateral and the full (Premium)
  • 9. 
    A Sellput refers to selling off shares while a Sellput refers to buying(Acquiring) new shares
    • A. 

      True

    • B. 

      False

  • 10. 
    A SELL CALL for AMC ( CURRENTLY AT 6.98/share PRICE) was purchased on September 12, 2020 You received 200$ of premium, Expiration is on 1/21/22 and the STRIKE PRICE is at 12.00$, Fast forward to January 21, 2022, The stock is trading at 9.00/Share Which scenario is MOST LIKELY to happen.
    • A. 

      You keep your Collateral (Shares) however, you DO NOT keep the premium of 200$

    • B. 

      You keep your Collateral (Shares) however, you also DO keep your premium of 200$

    • C. 

      You DO NOT keep your Collateral (Shares) however, you successfully have sold your shares for a profit at the strike price of 12.00/share. As well  as you keep the premium

    • D. 

      You DO keep your Collateral (Shares) however, you successfully have sold your shares for a profit at the strike price of 12.00/share. As well  as you don't keep the premium

  • 11. 
    Expiration refers to the last date the holder of the options may get to exercise their contract according to the terms
    • A. 

      True

    • B. 

      False

  • 12. 
    A SELL CALL for AMC ( CURRENTLY AT 8.00/share PRICE) was purchased on September 12, 2020 You received  600$ of premium, Expiration is on 1/21/22 and the STRIKE PRICE is at 5.00$, Fast forward to January 21, 2022, The stock is trading at 6.50/Share Which scenario is MOST LIKELY to happen.
    • A. 

      You keep your collateral (Shares) However, you also DO keep your premium of 600$

    • B. 

      You DO NOT keep your collateral (Shares) however, you have successfully sold your shares for a profit at the strike price of 6.50/share as well as you keep the premium

    • C. 

      You DO keep your collateral (Shares) however, you have successfully sold your shares for a profit at the strike price of 6.50/share as well as you keep the premium

    • D. 

      You keep your Collateral (Shares) however, you DO NOT keep the premium of 600$

  • 13. 
    A Strike price is the same as the Stock price
    • A. 

      True

    • B. 

      False

  • 14. 
    A Buyput is the same as a SellPut
    • A. 

      True

    • B. 

      False

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