F&o Basic Test - Efa
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Yesterday Bought Axis Bank Futures 250 qty @ 1450 Yesterday Bought Tata Steel Futures 1000 qty @ 415 Yesterday Bought Hexaware Futures 2000 qty @ 165 Yesterday Sold 150 qty (3 lots) Nifty @ 6700 Today's opening rate : Axis Bank 1448, Tata Steel 412, Hexaware 166, Nifty 6675 Calculate P&L if positions sq. up at today's opening rate
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1250 profit
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2250 loss
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2250 profit
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1250 loss
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This F&O Basic Test - EFA assesses knowledge in options trading, focusing on calculating payoffs, break-even points, and profit and loss under various market conditions. It evaluates strategic understanding through practical scenarios, making it relevant for financial market professionals.
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- 2.
A Client Bought Nifty 6600 PE April 50 Qty @ 25 & Sold 6700 CE 50 Qty @ 25 What is Client's view ? :
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Bullish
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Neutral
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Bearish
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High Volatility expected
Correct Answer
A. BearishExplanation
The client's view is bearish because they bought a put option (Nifty 6600 PE) which gives them the right to sell the Nifty index at a strike price of 6600. This indicates that they expect the price of the Nifty index to decrease. Additionally, they sold a call option (Nifty 6700 CE) which gives someone else the right to buy the Nifty index at a strike price of 6700. By selling this call option, the client is betting that the price of the Nifty index will not increase above 6700. Both of these actions suggest a bearish outlook on the market.Rate this question:
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- 3.
Client A Bought 6500 PE Nifty April 50 Qty @ 25. Calculate BEP
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6475
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6525
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6500
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6487
Correct Answer
A. 6475Explanation
The break-even point (BEP) is the point at which the client will neither make a profit nor incur a loss. In this case, the client bought 6500 PE Nifty April 50 Qty at a price of 25. To calculate the BEP, we need to find the average cost per unit. The total cost is the quantity multiplied by the price, which is 6500 * 25 = 162,500. The average cost per unit is then calculated by dividing the total cost by the quantity, which is 162,500 / 6500 = 25. The BEP is the average cost per unit minus the price, which is 25 - 25 = 0. Therefore, the correct answer is 6475.Rate this question:
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- 4.
Client B Sold 6900 CE Nifty April 50 Qty @ 25. Calculate BEP
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6875
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6900
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6925
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6887
Correct Answer
A. 6925 -
- 5.
A Client Sold Nifty 6700 PE April 50 Qty @ 25 Calculate P&L if Nifty closes at i) 6600 & ii) 6700 on expiry
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I) Rs 25 Profit & ii) No profit
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I) Rs 25 Profit & ii) Rs 25 loss
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I) Rs 75 Profit & ii) Rs 25 loss
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I) Rs 75 Loss & ii) Rs 25 Profit
Correct Answer
A. I) Rs 75 Loss & ii) Rs 25 ProfitExplanation
The client sold Nifty 6700 PE options at a price of Rs 25. If Nifty closes at 6600 on expiry, the option will be in the money and the client will incur a loss of Rs 75 (6700-6600-25). However, if Nifty closes at 6700 on expiry, the option will be at the money and the client will not incur any profit or loss. Therefore, the correct answer is i) Rs 75 Loss & ii) Rs 25 Profit.Rate this question:
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- 6.
A Client Sold Nifty 6800 CE April 50 Qty @ 25 i) Calculate Initial Pay off (Payment at the time of transaction) & ii) BEP
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I) Rs 25 paid by the Client & ii) 6775
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I) Rs 25 received by the Client & ii) 6825
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I) Rs 25 received by the Client & ii) 6775
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I) Rs 25 paid by the Client & ii) 6825
Correct Answer
A. I) Rs 25 received by the Client & ii) 6825Explanation
The client received Rs 25 at the time of the transaction, which is the initial payoff. The break-even point (BEP) is the point at which the client neither makes a profit nor a loss. In this case, the BEP is 6825, which means that the client will start making a profit if the Nifty 6800 CE April 50 Qty goes above 6825.Rate this question:
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- 7.
A Client Bought Nifty 6600 CE April 50 Qty @ 25 & Sold 6700 CE April 50 Qty @ 25 What is Client's view ? :
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Bullish
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Neutral
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Bearish
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High Volatility expected
Correct Answer
A. BullishExplanation
The client's view is bullish because they bought a call option (Nifty 6600 CE) and sold a higher strike call option (Nifty 6700 CE). This strategy is known as a bull call spread, where the client expects the price of the underlying asset (Nifty) to increase. By buying the lower strike call option and selling the higher strike call option, the client is able to profit from the price increase while limiting their potential losses.Rate this question:
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- 8.
Client A Bought 6500 PE April 50 Qty @ 25 and Client B Sold 6900 CE Nifty 50 Qty @ 25. What is the maximum Profit that they can make if position turns in their favour ?
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Client A - Unlimited, Client B - 25
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Client A- 25, Client B - Unlimited
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Client A - 6425, Client B - Unlimited
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Client A - 6475, Client B - 25
Correct Answer
A. Client A - 6475, Client B - 25Explanation
Client A bought a put option (6500 PE) and Client B sold a call option (6900 CE). Both options have a strike price of 25. If the position turns in their favor, Client A can make unlimited profit because the put option gives them the right to sell the underlying asset (in this case, Nifty) at the strike price, which is lower than the market price. Client B, on the other hand, can only make a profit of 25 because the call option gives them the right to buy the underlying asset at the strike price, which is higher than the market price. Therefore, the maximum profit they can make is Client A - 6475 and Client B - 25.Rate this question:
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Mar 21, 2023Quiz Edited by
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Apr 21, 2014Quiz Created by
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