Unit 0.5: Intro To Buying Options
8 Questions
This is 1/2 quizzes The next quiz is on Dollar Cost Averagee then test on EVERYTHING 25+ questions
Questions and Answers
- 1.You buy a CALL OPTION contract from APPLE at a strike price of 100$ ( Currently apple is at 115$ ). You pay a 10.00 premium for the contract. If the stock tanks to 50/share what will happen to your call option position? What is your max gain... or loss?
- 2.What do Buyers have to give to the sellers in order to receive the right for their contract
- A.
Collateral
- B.
Shares
- C.
Premium
- D.
Implied Volatility
- 3.Your strike price is a fixed price with PERSON 1 ( The Buyer ) and PERSON 2 ( The Seller )
- A.
True
- B.
False
- 4.It takes both a Buyer and a Seller to make a Contract ( whether it be Put or Call )
- A.
True
- B.
False
- 5.If Erick were to buy a CALL option from APPLE at a strike price of 90 while APPLE's share price is 115/Share as of 9/29/20 would the option be IN THE ____?
- A.
In The Money
- B.
Out Of The Money
- C.
In the Rhetoric
- D.
In The Premium
- 6.Erick Buys a PUT OPTION from AMC at a strike price of 8.00/Share he PAYS 4.00 AKA 400$ for that contract... Fast forward to expiration AMC is trading at 1/share what is Erick's Profit?
- A.
Erick's Option Expired WORTHLESS Lost 400$ premium
- B.
Ericks Option expired at breakeven (4.00) meaning he didn't lose anything nor gain anything
- C.
Ericks Profit is 700$ because the strike price is 8.00$ and 8.00 - 1.00 = 700
- D.
Ericks Profit is 300$ because although 8.00 - 1.00 = 700$ he paid (400$)
- 7.A put is a bullish position ( stock will rise )
- A.
True
- B.
False
- 8.Erick is selling a put option to Yahir at a strike price of 12.00$ Yahir pays Erick 2.00$ for the options contract. The stock rises to 15.00$ a share at expiration. What will happen to ERICK
- A.
Erick will lose 200$ at expiration
- B.
Erick will be obligated to buy 100 shares at expiration
- C.
Yahir pays Erick another 200$ at expiration
- D.
Erick will not be obligated to buy 100 shares and he keeps 200$
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Sample QuestionThe 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 )
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