Options Test Options Knowledge Test Instructions: Answer all 25 questions. Each question is worth 4 points. Total score: 100 points. Attempt Limit: You may take this test up to 3 times using the same email address. Student Name Student Email 1. What does Gamma measure? How fast Delta changes The number of shares owned How fast time passes Only the bid price 2. What usually happens to implied volatility after earnings? It turns into Delta It often drops It always doubles It becomes zero forever 3. What does Vega measure? Stock dividends Broker margin Time decay Sensitivity to implied volatility changes 4. Why do deep ITM options usually cost more? They have more intrinsic value They have no value They cannot expire They are always free 5. What is implied volatility? The company’s revenue The dividend amount The broker’s fee The market’s expectation of future price movement 6. One standard stock options contract usually controls how many shares? 50 shares 100 shares 10 shares 1,000 shares 7. 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 8. What does a Put option give the buyer? The right to buy the underlying asset The right to receive dividends The right to vote The right to sell the underlying asset 9. What are weekly options? Options that pay weekly dividends Options that expire on a weekly schedule Options only for banks Options that never expire 10. What does ITM mean? Initial Trading Margin Investment Trade Method In The Money Inside The Market 11. What does ATM mean in options? Automated Teller Machine After Trading Market At The Money Approved Trading Method 12. Which Greek measures directional exposure? Rho Vega Delta Theta 13. What is trading volume in options? The number of contracts traded during a period The company’s annual revenue The broker’s commission The expiration price 14. Why are liquid options preferable? They usually have tighter spreads and easier execution They always expire ITM They never lose money They remove all risk 15. What is the primary advantage of buying options instead of shares? Options always pay dividends Options can provide leverage with less upfront capital Options never expire Options have no risk 16. What does time value mean in options? The time the market opens The company’s age The number of trading apps used Value based on time remaining before expiration 17. What is a long option position? Opening a bank account Buying an option contract Owning a bond Selling stock short 18. 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 19. What is the main risk of buying options? The option can expire worthless and the buyer can lose the premium The buyer has unlimited loss The stock cannot move The broker always refunds the trade 20. What does OTM mean? Out of The Money Option Transfer Method Open Trade Market Over The Market 21. What is an options contract? A company ownership certificate A savings account A financial contract giving the buyer the right, but not obligation, to buy or sell an asset A bank loan 22. What does assignment mean in options trading? The buyer receives homework The option seller is required to fulfill the contract terms The stock becomes worthless The broker cancels the trade 23. What does exercising an option mean? Canceling the option Changing brokers Receiving a refund Using the right to buy or sell at the strike price 24. Which factor usually decreases an option’s value over time? Time decay Higher implied volatility Increased demand More time remaining 25. What is the strike price? The broker fee The price at which the option can be exercised The current stock price only The dividend amount Submit Test
