UNIT 0.5: Intro To Buying Options

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1/8 Questions

What do Buyers have to give to the sellers in order to receive the right for their contract
- Collateral
- Shares
- Premium
- Implied Volatility

Unit 0.5: Intro To Buying Options - Quiz

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2.

Your strike price is a fixed price with PERSON 1 ( The Buyer ) and PERSON 2 ( The Seller )
- True
- False
Correct Answer

A. True
3.

It takes both a Buyer and a Seller to make a Contract ( whether it be Put or Call )
- True
- False
Correct Answer

A. True
4.

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 ____?
- In The Money
- Out Of The Money
- In the Rhetoric
- In The Premium
Correct Answer

A. In The Money
5.

A put is a bullish position ( stock will rise )
- True
- False
Correct Answer

A. False
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?
- Erick's Option Expired WORTHLESS Lost 400$ premium
- Ericks Option expired at breakeven (4.00) meaning he didn't lose anything nor gain anything
- Ericks Profit is 700$ because the strike price is 8.00$ and 8.00 - 1.00 = 700
- Ericks Profit is 300$ because although 8.00 - 1.00 = 700$ he paid (400$)
Correct Answer

A. Ericks Profit is 300$ because although 8.00 - 1.00 = 700$ he paid (400$)
7.

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
- Erick will lose 200$ at expiration
- Erick will be obligated to buy 100 shares at expiration
- Yahir pays Erick another 200$ at expiration
- Erick will not be obligated to buy 100 shares and he keeps 200$
Correct Answer

A. Erick will not be obligated to buy 100 shares and he keeps 200$
8.

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?

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Mar 21, 2022

Quiz Edited by
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Sep 29, 2020

Quiz Created by
Erick Oliva

Unit 0.5: Intro To Buying Options

What do Buyers have to give to the sellers in order to receive the right for their contract

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Your strike price is a fixed price with PERSON 1 ( The Buyer ) and PERSON 2 ( The Seller )

It takes both a Buyer and a Seller to make a Contract ( whether it be Put or Call )

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 put is a bullish position ( stock will rise )

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?

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

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?