Options Test

1. What is a long option position?

Opening a bank account Buying an option contract Selling stock short Owning a bond

2. What is the expiration date?

The date dividends are paid The date the option contract ends The date the stock market closes permanently The date the company reports taxes

3. What is intrinsic value?

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

4. What does Theta measure?

Time decay Dividend yield Stock ownership Open interest

5. What are LEAPS?

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

6. 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

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

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

8. What happens if an option buyer does nothing before expiration?

The premium is refunded The option becomes stock forever The option may expire worthless or be handled based on broker rules The trade is erased

9. One standard stock options contract usually controls how many shares?

50 shares 1,000 shares 10 shares 100 shares

10. Which Greek is most connected to implied volatility?

Theta Delta Vega Rho

11. Why do options lose value as expiration approaches?

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

12. What is the bid-ask spread?

The difference between stocks and bonds The difference between the highest buyer price and lowest seller price The broker’s tax form The dividend amount

13. What happens when an option expires worthless?

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

14. What usually happens to implied volatility after earnings?

It turns into Delta It becomes zero forever It often drops It always doubles

15. What does Vega measure?

Sensitivity to implied volatility changes Broker margin Stock dividends Time decay

16. What is a short option position?

Closing a bank account Buying stock only Buying an option contract Selling or writing an option contract

17. What does a Call option give the buyer?

The right to buy the underlying asset The right to sell the underlying asset The right to receive dividends The obligation to sell shares

18. Which Greek measures directional exposure?

Rho Theta Vega Delta

19. What is Theta decay?

The loss of option value as expiration approaches A broker commission The increase in shares owned A type of stock split

20. Why are liquid options preferable?

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

21. What is the strike price?

The current stock price only The dividend amount The broker fee The price at which the option can be exercised

22. Why do deep ITM options usually cost more?

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

23. Higher implied volatility generally causes option premiums to:

Disappear Decrease to zero Increase Stay fixed forever

24. What is an options contract?

A financial contract giving the buyer the right, but not obligation, to buy or sell an asset A savings account A bank loan A company ownership certificate

25. When is a Put option considered ITM?

When the option expires When the stock price equals zero When the stock price is above the strike price When the stock price is below the strike price