Options Test

1. What is the primary advantage of buying options instead of shares?

Options always pay dividends Options have no risk Options never expire Options can provide leverage with less upfront capital

2. Higher implied volatility generally causes option premiums to:

Decrease to zero Increase Stay fixed forever Disappear

3. What is an options chain?

A table showing available option contracts A password list A dividend calendar A list of company employees

4. Which Greek is most related to time decay?

Delta Theta Gamma Rho

5. What are LEAPS?

Long-term options with expiration dates far in the future Options that expire the same day A type of crypto token A broker fee

6. What does Gamma measure?

How fast Delta changes Only the bid price The number of shares owned How fast time passes

7. Which factor usually increases an option’s value?

Zero volatility Less demand More time before expiration Expired contract status

8. What does exercising an option mean?

Changing brokers Receiving a refund Canceling the option Using the right to buy or sell at the strike price

9. Why should traders monitor implied volatility before buying options?

To remove all risk To avoid overpaying for expensive premiums To change the expiration date To guarantee profit

10. Why do deep ITM options usually cost more?

They cannot expire They have more intrinsic value They are always free They have no value

11. Why are liquid options preferable?

They always expire ITM They never lose money They remove all risk They usually have tighter spreads and easier execution

12. What is intrinsic value?

The broker commission The real value an option has if it is ITM The number of shares in an account The dividend payment

13. What are weekly options?

Options that expire on a weekly schedule Options only for banks Options that never expire Options that pay weekly dividends

14. Why do options lose value as expiration approaches?

Because options become shares Because time value decreases Because premiums are refunded Because stocks stop trading

15. What happens when an option expires worthless?

The buyer receives free shares The premium is refunded The buyer loses the premium paid The contract renews automatically

16. What is extrinsic value?

The guaranteed profit The company dividend The part of the premium based on time, volatility, and expectations The tax value

17. What does time value mean in options?

Value based on time remaining before expiration The company’s age The number of trading apps used The time the market opens

18. What does liquidity mean in options?

How much dividend is paid How long the market is open How much cash a company owns How easily an option can be bought or sold

19. What is an option premium?

A broker bonus A government fee The price paid to buy the option contract A stock dividend

20. What is open interest?

The broker’s interest rate The number of company shares only The number of outstanding option contracts The stock dividend

21. What does Delta measure?

Expiration date How much the option price may change when the underlying moves $1 Time decay Trading volume

22. Why are options often expensive before major news events?

Because premiums are fixed Because implied volatility is usually higher Because they cannot expire Because brokers set all prices manually

23. What does assignment mean in options trading?

The broker cancels the trade The option seller is required to fulfill the contract terms The buyer receives homework The stock becomes worthless

24. What does a Put option give the buyer?

The right to vote The right to receive dividends The right to sell the underlying asset The right to buy the underlying asset

25. What does ATM mean in options?

Approved Trading Method At The Money After Trading Market Automated Teller Machine