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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. An investment strategy in which stock is purchased and call options are written on a greater than one-for-one basis.More calls written than the equivalent number of shares purchased.
Adjusted Option
Ratio write
Chicago Board Options Exchange (CBOE)
Option
2. This formula can be used to calculate a theoretical value for an option using current stock prices - expected dividends - the option's strike price - expected interest rates - time to expiration - and expected stock volatility.
Black-Scholes formula
Pin risk
Calendar spread
Broker loan rate
3. Another name for calendar spread.
Offer price
Synthetic short call
Horizontal spread
Credit spread
4. A strategy involving four options of the same type that span three strike prices. The strategy has both limited risk and limited profit potential.
Volatility
Butterfly spread
Strangle
Bid/bid price
5. An option that has intrinsic value
Ask/ask price
Broker loan rate
Early exercise
In-the-money option (ITM)
6. An option on shares of an individual common stock.
Break-even point(s)
Put-call ratio
Debit spread
Equity option
7. A list of the options available for the underlying stock symbols in which you are interested.
Early exercise
At-the-money
At-the-money
Option Chain
8. Charge levied for the privilege ofborrowing money
Interest
Horizontal spread
Leverage
Bull spread (put)
9. A four-sided option spread that involves a long call and a short put at one strike price as well as a short call and a long put at another strike price. (buying 1 LMN Jan 50 call - and writing 1 LMN Jan 55 call; simultaneously buying 1 LMN Jan 55 put
LEAPS
Time value
Neutral spread
Box spread
10. An option strategy with limited risk and limited profit potential that involves both a long(or short) straddle - and a short (or long) strangle. (short strangle: buying 1 ABC May 90 call and 1 ABC May 90 put - and writing 1 ABC May 95 call and writin
ATM
Time spread/Calendar spread/Horizontal spread
Investment
Iron butterfly
11. The part of an options total price that exceeds its intrinsic value. Price of an out-of-money option consists entirely of time value.
Vega
FOK
Bear
Time value
12. 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.
Offer price
Option Chain
Put-call ratio
Analytics
13. Same as ask price
Bear market
Offer price
Hedging
Synthetic long stock
14. A long stock position and a long put position.
Interest
Synthetic Long call
Expiration
Option writer
15. The time of day by which all exercise notices must be received on the expiration date.
ATM
Options pricing curve
Option writer
Expiration time
16. An option whose exercise price is equal to the current market price of the underlying security. An ATM option may or may not have intrinsic value.
ATM
At-the-money
Contract size
Bull spread (put)
17. The sensitivity of an options theoretical value to a change in implied volatility.
Selling short
Vega
Index
Ask/ask price
18. This formula can be used to calculate a theoretical value for an option using current stock prices - expected dividends - the option's strike price - expected interest rates - time to expiration - and expected stock volatility.
Black-Scholes formula
Butterfly spread (Call)
Expiration date
Market on close (MOC)
19. Evaluating an options value through the use of a pricing model allows one to determine the theoretical value of the option(price you would expect to pay in order to break even)
Butterfly spread (Call)
Options pricing model
Bear spread (call)
reaking
20. 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)
Arbitrage
Fences
Gamma
Adjusted Option
21. An option position that involves the purchase/sale of a call and the sale (purchase of a put on the same underlying strike with the same expiration. Can also be referred to as any set of multiple purchases and sales of options.
Calendar spread
Synthetic Long call
Expiration
Combination
22. The largest and oldest listed options exchange.
Chicago Board Options Exchange (CBOE)
Option writer
Neutral strategy
Exercise
23. The simultaneous purchase and sale of options of the same class (call or put - having same underlying) at the same strike prices - but with different expiration dates - selling the short-term option and buying the long-term option.
Synthetic long stock
AON
Calendar spread
Synthetic long put
24. The risk to an investor that the stock price will exactly equal the strike price of a written option at expiration. (risk to be pinned with stock)
Pin risk
Collar
Rho
Black-Scholes formula
25. A long stock position and a short call position.
Volatility
Synthetic short put
Interest
Bear
26. Term used to describe the ownership of a security - contract - or commodity that grants the owner the right to transfer ownership by sale or gift.
GTC
At-the-money
Long position
Underlying
27. Received notification of an assignment by rhw options clearing corporation.
Offer price
Assigned
Theta
Interest
28. The price that an owner of an option can purchase (call) or sell (put) the underlying stock.
Indexing
Assignment
Short
Strike price
29. An option strategy that generally involves the purchase of a farther-term option (call or put) and the selling (writing) of an equal number of nearer-term options of the same type and strike price. (buying 1ITI May 60 cal[ far term portion of spread]
Underlying
Time spread/Calendar spread/Horizontal spread
Hedging
Indexing
30. Commodity trading advisor.
Extrinsic value
Open interest
Horizontal spread
CTA
31. A graphical representation of the estimated theoretical value of an option at one point in time - at various prices of the underlying stock.
Covered option
At-the-money
Synthetic Long call
Options pricing curve
32. A short stock position and a long call position.
Synthetic Long call
Iron butterfly
Synthetic long put
Strike price
33. Good Til Cancel
GTC
Equivalent strategy
Call Option
Expiration month
34. Calculations performed on updated prices.
AON
Call Option
Expiration date
Analytics
35. The stock price(s) at which an option strategy results in neither a profit nor a loss.
Break-even point(s)
Expiration cycle
Neutral strategy
Bear spread
36. A short stock position and a long call position.
Assigned
Synthetic long put
Bear spread
Neutral
37. A long stock position and a long put position.
Options pricing curve
Synthetic Long call
Collar
Theoretical value (TV)
38. 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.
Last trading day
Option
Short stock position
Out-of-the-money (OTM)
39. A position resulting from the sale of a contract or instrument that you do not own.
Arbitrage
Short
Open interest
Good til cancel (GTC) order
40. The stock price(s) at which an option strategy results in neither a profit nor a loss.
Break-even point(s)
Analytics
Equivalent strategy
Expiration
41. Received notification of an assignment by rhw options clearing corporation.
Short stock position
Put-call ratio
Assigned
Expiration
42. A short call position and a long put position.
Break-even point(s)
Fences
Underlying
Synthetic short stock
43. 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).
Short
Equivalent strategy
Out-of-the-money (OTM)
Synthetic short put
44. An option on shares of an individual common stock.
Bull spread (put)
Implied volatility
Hedging
Equity option
45. The price of an option less its intrinsic value. The entire premium of an out-of-the-money option consists of extrinsic value. This is often referred to as the time value portion of option premiums.
Leverage
Box spread
Gamma
Extrinsic value
46. A contract to buy or sell a predetermined Quantity of a commodity or financial product for a specific price on a given date.
ATM
Expiration date
Long position
Future
47. The total number of outstanding option contracts in a given series
Fill-or-kill order (FOK)
Box spread
Bull (or bullish) spread
Open interest
48. Designated primary market maker.
Calendar spread
Delta
DPM
Option writer
49. The part of an options total price that exceeds its intrinsic value. Price of an out-of-money option consists entirely of time value.
Time decay
Strike price
Time value
Expiration date
50. 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)
Put-call ratio
Out-of-the-money (OTM)
Covered call/Covered call writing
Fill-or-kill order (FOK)