Unit 0.5: Intro To Buying Options

8 Questions

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Unit 0.5: Intro To Buying Options

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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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