Options Test

1. What does exercising an option mean?

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

2. Which Greek is most connected to implied volatility?

Delta Vega Theta Rho

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

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

4. What does leverage mean in options?

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

5. What does Vega measure?

Sensitivity to implied volatility changes Broker margin Time decay Stock dividends

6. What is an options chain?

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

7. What is the main risk of buying options?

The stock cannot move The broker always refunds the trade The option can expire worthless and the buyer can lose the premium The buyer has unlimited loss

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

Expired contract status More time before expiration Zero volatility Less demand

9. What does Delta measure?

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

10. What is trading volume in options?

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

11. Can options expire?

Only Puts expire Only Calls expire No, options last forever Yes, every option has an expiration date

12. Which Greek is most related to time decay?

Theta Gamma Rho Delta

13. What are LEAPS?

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

14. Why do options lose value as expiration approaches?

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

15. What is volatility crush?

A sharp drop in implied volatility after an expected event A broker fee A guaranteed profit strategy A stock split

16. What are weekly options?

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

17. When is a Call option considered ITM?

When the stock price is below the strike price When the premium is zero When the option has no buyer When the stock price is above the strike price

18. What is an options contract?

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

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

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

20. What is an option premium?

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

21. 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

22. What can happen with wide bid-ask spreads?

Trades become free Premiums are guaranteed Contracts never expire Traders may pay more to enter and receive less to exit

23. What does assignment mean in options trading?

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

24. Higher implied volatility generally causes option premiums to:

Increase Disappear Stay fixed forever Decrease to zero

25. What does ATM mean in options?

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