# Unit 0.5: Intro To Buying Options

8 Questions

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• 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.

• 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.

• 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\$