Unit 0.5: Intro To Buying Options

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

True

False

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

True

False

3. 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

4. A put is a bullish position ( stock will rise )

True

False

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

Collateral

Shares

Premium

Implied Volatility

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$)

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$