Options Test

1. Higher implied volatility generally causes option premiums to:

Decrease to zero Disappear Stay fixed forever Increase

2. What usually happens to implied volatility after earnings?

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

3. What does Theta measure?

Time decay Open interest Stock ownership Dividend yield

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

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

5. What happens when an option expires worthless?

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

6. 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

7. Can options expire?

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

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

Expired contract status More time before expiration Zero volatility Less demand

9. When is a Call option considered ITM?

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

10. Which Greek is most related to time decay?

Gamma Rho Theta Delta

11. What is the bid-ask spread?

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

12. What are weekly options?

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

13. What does a Put option give the buyer?

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

14. What are LEAPS?

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

15. Why do deep ITM options usually cost more?

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

16. What is the main risk of buying options?

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

17. What is intrinsic value?

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

18. 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

19. When is a Put option considered ITM?

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

20. What is a long option position?

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

21. Which Greek measures directional exposure?

Delta Theta Vega Rho

22. Which factor usually decreases an option’s value over time?

Higher implied volatility Increased demand Time decay More time remaining

23. What does ATM mean in options?

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

24. What is extrinsic value?

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

25. What is an options chain?

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