SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
Options Trading
Start Test
Study First
Subjects
:
industries
,
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The cycle of expiration dates used in short-term options trading. there are three cycles: (January - April - July - October; February - May - August - November; or March - June - September - December) Because options are traded in contracts for three
Interest
Strangle
Expiration cycle
Chicago Board Options Exchange (CBOE)
2. The simultaneous purchase and sale of options of the same class at different strike prices - but with the same expiration date. (ABC April 150/155 call spread. you purchase the ABC Apr 150 call and sell the ABC Apr 155 call). similar to the outright
Vertical spread
Short stock position
Backspread
Collar
3. A debit spread in which a rise in the price of the underlying security will theoretically increase the value of the spread. (buying 1 XYZ Jan 50 call and writing 1 XYZ Jan 55 call)
Theta
Bull spread (call)
Early exercise
Good til cancel (GTC) order
4. The total number of outstanding option contracts in a given series
AON
Open interest
DPM
Butterfly spead (Put)
5. Third Friday of expiration month
Index
Equivalent strategy
Last trading day
Broker loan rate
6. An order that is designated to be executed on or before the expiration date.
All-or-none order (AON)
Cash-settled American index options (cash index)
Expiration cycle
Expiration time
7. A short call position and a long put position.
Bear
Early exercise
Interest
Synthetic short stock
8. A market drop in the price of a security
In-the-money option (ITM)
Gamma
reaking
Option writer
9. A trading technique that involves the simultaneous purchase and sale of identical assets traded on two different exchanges with the intention of profiting by a difference in price between exchanges.
Broker loan rate
Theoretical value (TV)
Bear spread (call)
Arbitrage
10. The sensitivity of an options theoretical value to a change in implied volatility.
At-the-money
Expiration
ATM
Vega
11. The total price of an option: intrinsic value plus extrinsic value
Expiration
Premium
Spread
ATM
12. A delta-neutral spread composed of more long options than short options on the same underlying instrument. This position generally profits from a large movement in either direction in the underlying instrument.
Backspread
Combination
Indexing
Cash-settled American index options (cash index)
13. An option strategy in which call options are sold against equivalent amounts of long stock. ( writing 2XYZ Jan 50 calls while owning 200 shares of XYZ stock)
Covered call/Covered call writing
Ask/ask price
Option
Combination
14. The ratio of trading volume in put options to the trading volume in call options. The ratio provides a quantitative measure of the bullishness or bearishness of investors.
Put-call ratio
Adjusted Option
Underlying
Straddle
15. Designated primary market maker.
Implied volatility
Synthetic short call
Uncovered option/Naked option
DPM
16. An individual with the opinion that a security - or the market in general will decline in price; someone having a negative or pessimistic outlook.
Bear
Synthetics
Synthetic Long call
Expiration
17. Two or more trading vehicles packaged to emulate another trading vehicle or spread. Because the package involves different components - price is also different - but risk is the same.
Synthetics
Option Chain
Backspread
Diagonal spread
18. A person who believes that a security - or the market in general - will rise in price; a positive or optimistic outlook.
Bull
Option writer
Synthetic short stock
Black-Scholes formula
19. A means of increasing return or worth without increasing investment.
Edge
Expiration cycle
Leverage
Indexing
20. Received notification of an assignment by rhw options clearing corporation.
Indexing
Box spread
In-the-money option (ITM)
Assigned
21. An option created as the result of a special event such as a stock split - stock dividend - merger or spin-off taking place during the life of an option. ( adjusted option may cover more than the usual one hundred shares)
Option Chain
Selling short
Synthetic long put
Adjusted Option
22. Charge levied for the privilege ofborrowing money
Interest
Cash-settled American index options (cash index)
American-style options
ATM
23. A contract that gives the owner the right - if exercised - to buy or sell a security at a specific price within a specific time limit.
Bull spread (call)
Bid/bid price
Adjusted Option
Option
24. A long call position and a short put position.
Leg
Bear market
Synthetic long stock
Box spread
25. The interest expense on money borrowed to finance a margined securities position.
Leg
Carry/Carrying charge
Early exercise
Uncovered option/Naked option
26. The sensitivity of an option's delta at a given moment in time. It is the change in delta with respect to a 1-point change in the underlying. Examplee (let's say a call option with a 100 strike price has a 50 delta. If the underlying moves from 100 t
Covered option
Interest rate risk
Gamma
GTC
27. A spread in which the difference in the long and short options premiums results in a net debit.
Diagonal spread
Butterfly spread (Call)
Debit spread
Theta
28. A prolonged period of falling prices. A bear market in stocks is usually brought on by the anticipation of declining economic activity.
Box spread
Call Option
Bear market
Synthetic long put
29. The date on which an option and the right to exercise it cease to exist. Listed stock options expire the Saturday following the third Friday of every month.
Historic volatility
Synthetic long stock
Black-Scholes formula
Expiration date
30. Amount by which an option is ITM.
Clearinghouse
Synthetic short call
Theta
Intrinsic value
31. A strategy involving two or more options of the same type (or options combined with an underlying stock position) that will profit from a rise in the price of the underlying stock. Consists or selling an option with a higher strike - and buying an op
Vega
Horizontal spread
Bull (or bullish) spread
Assignment
32. A short stock position and a short put position.
In-the-money option (ITM)
Synthetic short call
Put-call ratio
Options pricing curve
33. A strategy involving four options of the same type that span three strike prices. The strategy has both limited risk and limited profit potential.
Butterfly spread (Call)
Short stock position
Butterfly spread
Options pricing model
34. The part of an options total price that exceeds its intrinsic value. Price of an out-of-money option consists entirely of time value.
Break-even point(s)
In-the-money option (ITM)
Time value
FOK
35. The highest price a dealer is willing to pay for a security at a particular time.
Bid/bid price
Future
Spread
Time spread/Calendar spread/Horizontal spread
36. A a feature of American-style options that allows the owner to exercise an option at any time prior to its expiration date.
Call Option
Short
Early exercise
Cash-settled American index options (cash index)
37. An order that is designated to be executed on or before the expiration date. (all or none)
AON
reaking
Fences
Break-even point(s)
38. An open short option position that is offset by a corresponding stock position on a share-for-share basis. This ensures that if the owner of the option exercises - the writer of the option will not have a problem fulfilling the delivery requirements.
Vertical spread
Covered option
Time value
Neutral
39. Fill-or-kill order
GTC
FOK
Conversion
Option Chain
40. Investment strategy that has a similar risk/reward profile as another investment strategy. (a long May 60-65 call vertical spread is equivalent to a short May 60-65 put vertical spread).
Neutral spread
Synthetic short put
Horizontal spread
Equivalent strategy
41. An option that can be exercised only at expiration. Usually expire the third Friday of every month
Straddle
Offer price
European-style option
FOK
42. Amount by which an option is ITM.
Intrinsic value
Chicago Board Options Exchange (CBOE)
Interest
Historic volatility
43. A credit spread in which a rise in price of the underlying security will theoretically increase the profit value of the spread. (writing 1 XYZ Jan 55 put and buying 1 XYZ Jan 50 put)
Index option
In-the-money option (ITM)
Leverage
Bull spread (put)
44. A long stock position and a short call position.
Synthetic short put
Options pricing curve
Options pricing model
Edge
45. The lowest price at which a dealer or trader is willing to sell a tradable instrument at a particular time.
Fill-or-kill order (FOK)
Class of options
Ask/ask price
Bear spread
46. Long-term equity anticipation securities are calls and puts with expiration's as long as two to three years.
Black-Scholes formula
Expiration
LEAPS
Intrinsic value
47. A contract that gives the owner the right - if exercised - to buy or sell a security at a specific price within a specific time limit.
Pin risk
Option
Bull spread (put)
Bull spread (put)
48. A spread in which the difference in the long and short options premiums results in a net debit.
Synthetic short put
Debit spread
Expiration month
Underlying
49. A position resulting from the sale of a contract or instrument that you do not own.
Covered call/Covered call writing
Strike price
Short
Synthetic long stock
50. Process by which the holder of an option notifies the seller of intention to take delivery of the underlying in the case of a call - or make delivery in the case of a put - at the specified exercise price.
Exercise
Call Option
Series of options
CTA