Options Test

1. What is the strike price?

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

2. What does Delta measure?

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

3. What does Theta measure?

Dividend yield Open interest Stock ownership Time decay

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

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

5. What does a Call option give the buyer?

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

6. What is trading volume in options?

The expiration price The broker’s commission The company’s annual revenue The number of contracts traded during a period

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

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

8. Why do options lose value as expiration approaches?

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

9. What does leverage mean in options?

Borrowing from a bank only Receiving guaranteed profit Avoiding expiration Controlling exposure to a larger asset value with less capital

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

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

11. What is a long option position?

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

12. Which Greek is most related to time decay?

Rho Delta Gamma Theta

13. Which Greek measures directional exposure?

Delta Theta Vega Rho

14. Why are liquid options preferable?

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

15. What is an options chain?

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

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

Zero volatility Expired contract status Less demand More time before expiration

17. When is a Put option considered ITM?

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

18. What is the expiration date?

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

19. What does exercising an option mean?

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

20. What does a Put option give the buyer?

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

21. What is implied volatility?

The market’s expectation of future price movement The dividend amount The broker’s fee The company’s revenue

22. What is extrinsic value?

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

23. Why do far OTM options usually cost less?

They contain more intrinsic value They never expire They are guaranteed to profit They have a lower probability of expiring ITM

24. What does OTM mean?

Open Trade Market Out of The Money Option Transfer Method Over The Market

25. What is an options contract?

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