Options

Question 1

A short straddle writer expects

Answer 1

Price stability

Question 2

A long straddle buyer expects

Answer 2

Volatility

Question 3

A long straddles profit potential is

Answer 3

Unlimited

Question 4

A short straddle’s gain potential is

Answer 4

The premiums received

Question 5

VIX options are ___

Answer 5

Bearish

Question 6

Long Put MG

Answer 6

BE X 100

Question 7

Short Put ML

Answer 7

BE X 100

Question 8

Buy 1 ABC Jan 50 Call @ $7
Sell 1 ABC Jan 60 Call @ $3

Answer 8

Debit Call Spread
$4 Debit
Bullish

Question 9

Buy 1 ABC Jan 60 Put @ $7
Sell 1 ABC Jan 50 Put @ $3

Answer 9

Debit Put Spread
$4 debit
Bearish

Question 10

Sell 1 ABC Jan 50 Call @ $7
Buy 1 ABC Jan 60 Call @ $3

Answer 10

Credit Call Spread
$4 Credit
Bearish

Question 11

Sell 1 ABC Jan 60 Put @ $7
Buy 1 ABC Jan 50 Put @ $3

Answer 11

Credit Put Spread
$4 Credit
Bullish

Question 12

If each leg of the spread has different strike prices, the spread is called a ____ spread

Answer 12

Vertical spread

Buy 1 ABC Jan 50 Call @7
Sell 1 ABC Jan 60 Call @3

Question 13

If each leg of the spread has different expiration dates, it’s is a

Sell 1 ABC Jan 70 Call @ $4
Buy 1 ABC Apr 70 Call @ $6

Answer 13

Horizontal/time spread

Question 14

A spread where both the price and time are different, it’s called a ____ spread

Buy 1 ABC Jan 70 Call @ $4
Sell 1 ABC Apr 60 Call @ $11

Answer 14

Diagonal

Question 15

Leg with larger premium is dominant and determines whether it is ____ or ___

Answer 15

Bearish or bullish

Question 16

CEPT

Answer 16

Contraction
Expansion
Peak
Trough

Question 17

Difference between combination and straddle

Answer 17

Combinations and straddles are identical with one exception. For a straddle, the calls and puts the investor is buying or selling will have the same strike price and expiration. In contrast, for a combination the expiration and/or strike prices of the two options will be different.

Question 18

Price directions in:

Bear spreads
Bull spreads

Answer 18

Bear
⬇️ short
⬆️long

Bull
⬆️long
⬇️short

Question 19

Opening position

Answer 19

Is credit (+)
CENO- Credit, Expire, Narrow, open

Question 20

Closing position

Answer 20

Is debit (-)
DEWC
Debit, exercise, widen, close

Question 21

Short straddles profit when they are _____ the breakevens

Answer 21

within

159 ⤵️
141⤴️

Question 22

Long straddles profit when they are ____ the breakevens

Answer 22

Outside

Example
159 ⤴️
141⤵️

Question 23

For Spreads- DEW

Answer 23

Debit, exercise, widen

Question 24

For Spreads-CEN

Answer 24

Credit, expire, narrow

Question 25

For spreads Credit is synonymous to

Answer 25

Selling/ short Because you profit in this case

Question 26

For spreads Debit is synonymous to

Answer 26

Buying / long Because you lose in this case

Question 27

Gain or loss in spreads always equals the difference between ____

Answer 27

Strike prices

Question 28

Long is a bull or bear?

Answer 28

Bull

Question 29

Short is a bull or bear?

Answer 29

Bear

Question 30

A spread is when you are ___ and ____ the same contract

Answer 30

Long and short

Question 31

Straddle profits- SILO means

Answer 31

Short in, long out

Question 32

NAV Equation

Answer 32

Assets- Liabilities ————————- Total number of outstanding shares

Question 33

Current Yield Equation

Answer 33

Annual interest ———————— Market price