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Options extra practice questions
1.
Options Practice Questions Dr.
Nivine Richie
2.
2 (1) An investor
that is long the ABC Mar 25 call at@1.10 when ABC is trading at $24.20 is said to be long an: A. In the money call B. At the money call C. Out of the money call
3.
3 (1) An investor
that is long the ABC Mar 25 call at@1.10 when ABC is trading at $24.20 is said to be long an: A. In the money call B. At the money call C. Out of the money call © 2016 Dr. N. Richie, UNCW
4.
4 (2) If the
investor that is long the ABC Mar 25 call at@1.10 exercises, then the short position will: A. Have the right to make delivery B. Have the right to take delivery C. Be obligated to make delivery D. Be obligated to take delivery © 2016 Dr. N. Richie, UNCW
5.
5 (2) If the
investor that is long the ABC Mar 25 call at@1.10 exercises, then the short position will: A. Have the right to make delivery B. Have the right to take delivery C. Be obligated to make delivery D. Be obligated to take delivery © 2016 Dr. N. Richie, UNCW
6.
6 (3) An investor
that is long the ABC Mar 25 call at@1.10 faces a maximum possible loss of: A. $1.10 per share B. $25 per share C. Unlimited D. $25 less $1.10 per share © 2016 Dr. N. Richie, UNCW
7.
7 (3) An investor
that is long the ABC Mar 25 call at@1.10 faces a maximum possible loss of: A. $1.10 per share B. $25 per share C. Unlimited D. $25 less $1.10 per share © 2016 Dr. N. Richie, UNCW
8.
8 (4) An investor
who is short the XYZ Mar 35 put when XYZ is trading at 37 is said to be short an: A. In the money put B. At the money put C. Out of the money put © 2016 Dr. N. Richie, UNCW
9.
9 (4) An investor
who is short the XYZ Mar 35 put when XYZ is trading at 37 is said to be short an: A. In the money put B. At the money put C. Out of the money put © 2016 Dr. N. Richie, UNCW
10.
10 (5) The writer
of a put contract faces a maximum possible gain of: A. The strike price B. The price of the underlying at expiration C. The premium D. The strike price less the premium © 2016 Dr. N. Richie, UNCW
11.
11 (5) The writer
of a put contract faces a maximum possible gain of: A. The strike price B. The price of the underlying at expiration C. The premium D. The strike price less the premium © 2016 Dr. N. Richie, UNCW
12.
12 (6) If LMN
is trading at $133 per share, then the Feb 125 Call is A. In the money B. At the money C. Out of the money © 2016 Dr. N. Richie, UNCW
13.
(6) If LMN
is trading at $133 per share, then the Feb 125 Call is A. In the money B. At the money C. Out of the money
14.
14 (7) If LMN
is trading at $123 per share, then the Feb 125 Call is A. In the money B. At the money C. Out of the money © 2016 Dr. N. Richie, UNCW
15.
15 (7) If LMN
is trading at $123 per share, then the Feb 125 Call is A. In the money B. At the money C. Out of the money © 2016 Dr. N. Richie, UNCW
16.
16 (8) The short
put position is: A. Bullish and hopes the market will decline. B. Bullish and hopes the market will rise. C. Bearish and hopes the market will decline. D. Bearish and hopes the market will rise. © 2016 Dr. N. Richie, UNCW
17.
17 (8) The short
put position is: A. Bullish and hopes the market will decline. B. Bullish and hopes the market will rise. C. Bearish and hopes the market will decline. D. Bearish and hopes the market will rise. NOTE: the short put may also have a neutral outlook and not expect the price of the underlying to move up or down. © 2016 Dr. N. Richie, UNCW
18.
18 (9) If the
holder exercises a put, then the writer will have the: A. Right to buy the underlying B. Right to sell the underlying C. Obligation to buy the underlying D. Obligation to sell the underlying © 2016 Dr. N. Richie, UNCW
19.
19 (9) If the
holder exercises a put, then the writer will have the: A. Right to buy the underlying B. Right to sell the underlying C. Obligation to buy the underlying D. Obligation to sell the underlying © 2016 Dr. N. Richie, UNCW
20.
20 (10) The XYZ
Mar 35 Call is out of the money when: A. XYZ is trading above $35 per share B. XYZ is trading below $35 per share © 2016 Dr. N. Richie, UNCW
21.
21 (10) The XYZ
Mar 35 Call is out of the money when: A. XYZ is trading above $35 per share B. XYZ is trading below $35 per share © 2016 Dr. N. Richie, UNCW
22.
22 (11) If in
January an investor wants to go long the DEF Jul 50 call trading at $3.70 when DEF is trading at $47, then in Jan he/she will have to pay: A. $3.70 per share B. $47 per share C. $50 per share D. $50 less $3.70 per share © 2016 Dr. N. Richie, UNCW
23.
23 (11) If in
January an investor wants to go long the DEF Jul 50 call trading at $3.70 when DEF is trading at $47, then in Jan he/she will have to pay: A. $3.70 per share B. $47 per share C. $50 per share D. $50 less $3.70 per share © 2016 Dr. N. Richie, UNCW
24.
24 (12) If ABC
is trading at $122 per share, then the Feb 125 Put is A. In the money B. At the money C. Out of the money © 2016 Dr. N. Richie, UNCW
25.
25 (12) If ABC
is trading at $122 per share, then the Feb 125 Put is A. In the money B. At the money C. Out of the money © 2016 Dr. N. Richie, UNCW
26.
26 (13) If ABC
is trading at $133 per share, then the Feb 125 Put is A. In the money B. At the money C. Out of the money © 2016 Dr. N. Richie, UNCW
27.
27 (13) If ABC
is trading at $133 per share, then the Feb 125 Put is A. In the money B. At the money C. Out of the money © 2016 Dr. N. Richie, UNCW
28.
28 (14) The XYZ
Mar 35 Put is in the money when: A. XYZ is trading above $35 per share B. XYZ is trading below $35 per share © 2016 Dr. N. Richie, UNCW
29.
29 (14) The XYZ
Mar 35 Put is in the money when: A. XYZ is trading above $35 per share B. XYZ is trading below $35 per share © 2016 Dr. N. Richie, UNCW
30.
30 (15) If the
holder exercises a put, then the writer will have to: A. Make delivery of the underlying B. Take delivery of the underlying © 2016 Dr. N. Richie, UNCW
31.
31 (15) If the
holder exercises a put, then the writer will have to: A. Make delivery of the underlying B. Take delivery of the underlying © 2016 Dr. N. Richie, UNCW
32.
32 (16) An investor
who is long the UUU Mar 35 put when UUU is trading at $33 is said to be long an: A. In the money put B. At the money put C. Out of the money put © 2016 Dr. N. Richie, UNCW
33.
33 (16) An investor
who is long the UUU Mar 35 put when UUU is trading at $33 is said to be long an: A. In the money put B. At the money put C. Out of the money put © 2016 Dr. N. Richie, UNCW
34.
34 (17) An investor
that is short the YYY Mar 25 call at@1.10 when YYY is trading at $26.50 is said to be short an: A. In the money call B. At the money call C. Out of the money call © 2016 Dr. N. Richie, UNCW
35.
35 (17) An investor
that is short the YYY Mar 25 call at@1.10 when YYY is trading at $26.50 is said to be short an: A. In the money call B. At the money call C. Out of the money call © 2016 Dr. N. Richie, UNCW
36.
36 (18) An investor
who buys an GGG Feb 130 put at $6.35 experiences a positive payoff if: A. GGG trades above $130 per share B. GGG trades below $130 per share C. GGG remains at $130 per share © 2016 Dr. N. Richie, UNCW
37.
37 (18) An investor
who buys an GGG Feb 130 put at $6.35 experiences a positive payoff if: A. GGG trades above $130 per share B. GGG trades below $130 per share C. GGG remains at $130 per share © 2016 Dr. N. Richie, UNCW
38.
38 Value of LONG
Call at Expiration XYZ Jun 17.50 Call at $2.50 ST In or out of the money? Payoff (intrinsic value) Profit 12.50 15.00 17.50 20.00 27.50 © 2016 Dr. N. Richie, UNCW
39.
39 Value of LONG
Call at Expiration XYZ Jun 17.50 Call at $2.50 ST In or out of the money? Payoff (intrinsic value) Profit 12.50 Out 0 -2.50 15.00 Out 0 -2.50 17.50 At 0 -2.50 20.00 In 2.50 0 27.50 In 10.00 +7.50 © 2016 Dr. N. Richie, UNCW
40.
40 Value of SHORT
Call at Expiration XYZ Jun 17.50 Call at $2.50 ST In or out of the money? Payoff (intrinsic value) Profit 12.50 15.00 17.50 20.00 27.50 © 2016 Dr. N. Richie, UNCW
41.
41 Value of SHORT
Call at Expiration XYZ Jun 17.50 Call at $2.50 ST In or out of the money? Payoff (intrinsic value) Profit 12.50 Out 0 +2.50 15.00 Out 0 +2.50 17.50 At 0 +2.50 20.00 In -2.50 0 27.50 In -10.00 -7.50 © 2016 Dr. N. Richie, UNCW
42.
42 Value of LONG
Put at Expiration AAA Feb 10 Put at $2.00 ST In or out of the money? Payoff (intrinsic value) Profit 6.00 8.00 10.00 12.00 14.00 © 2016 Dr. N. Richie, UNCW
43.
43 Value of LONG
Put at Expiration AAA Feb 10 Put at $2.00 ST In or out of the money? Payoff (intrinsic value) Profit 6.00 In 4.00 2.00 8.00 In 2.00 0 10.00 At 0 -2.00 12.00 Out 0 -2.00 14.00 Out 0 -2.00 © 2016 Dr. N. Richie, UNCW
44.
44 Value of SHORT
Put at Expiration AAA Feb 10 Put at $2.00 ST In or out of the money? Payoff (intrinsic value) Profit 6.00 8.00 10.00 12.00 14.00 © 2016 Dr. N. Richie, UNCW
45.
45 Value of SHORT
Put at Expiration AAA Feb 10 Put at $2.00 ST In or out of the money? Payoff (intrinsic value) Profit 6.00 In -4.00 -2.00 8.00 In -2.00 0.00 10.00 At 0 +2.00 12.00 Out 0 +2.00 14.00 Out 0 +2.00 © 2016 Dr. N. Richie, UNCW
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