Session II Assessment

Question 1

Question

This is an example of the naming convention of an option. Identify the standards of an option by dragging and dropping the correct label.

Image:

Nflx Example (binary/octet-stream)

Answer

Underlying Security
Technology
Company
Purchase Date
Expiration Date
stock price
strike price
option type
option market
premium
commission

Question 2

Question

Select the option that lists the differences between stocks and options.

Answer

Options are securities, Options are derivatives, & Options trade on national SEC (Securities Exchange Commission)-regulated exchanges.
Option orders are transacted through market makers and retail participants with bids to buy and offers to sell and can be traded like any other security.
Options trade on national SEC (Securities Exchange Commission)-regulated exchanges, Options have an expiration date, and There is no limit to the number of options that can be traded on an underlying stock.
Options are derivatives, Options have an expiration date, and Options exist only as “book entry,” which means they are held electronically.

Question 3

Question

Label the advantages and disadvantages of options.

Image:

Advvsdisadv (binary/octet-stream)

Answer

Leverage
Choices
Expiration
Not legally enforceable.
Fixed Risk
Unlimited Risk
Limited reward.
Unlimited reward.

Question 4

Question

The goal of any option strategy is to buy high and sell low.

Answer

True
False

Question 5

Question

When does a call buyer benefit?

Answer

When the underlying security goes down.
When the market is negative.
When the market is positive.
When the underlying security price rises

Question 6

Question

When does a put option buyer benefit?

Answer

When the underlying security's price rises.
When the stock market rises.
When the stock market declines.
When the underlying security's price declines.

Question 7

Question

A put seller benefits when the stock price trades [blank_start]above[blank_end] the option's strike price.

Answer

above
below
near
far from

Question 8

Question

The [blank_start]call[blank_end] option becomes more valuable when the stock price [blank_start]increases[blank_end] higher above the call's strike price.

Answer

increases
decreases
call
put

Question 9

Question

The [blank_start]call[blank_end] option becomes [blank_start]more[blank_end] valuable when the stock price increases higher above the [blank_start]strike[blank_end] price.

Answer

call
put
more
less
strike
stock

Question 10

Question

An option's [blank_start]strike[blank_end] price indicates the purchase/sale price of [blank_start]100[blank_end] shares of stock (per option contract) in the event that the option buyer [blank_start]exercise[blank_end]s, or the option expires [blank_start]in-the-money[blank_end].

Answer

strike
stock
100
1
exercise
sells
in-the-money
out-the-money

Question 11

Question

It is said that time decay is an option [blank_start]seller's[blank_end] best friend and option [blank_start]buyer's[blank_end] worst enemy.

Answer

seller's
market
buyer's
chain's

Question 12

Question

Please fill in the blanks for each section marked. Do not include the dollar sign. Enter in the following format: 0.00

Image:

Quiz (binary/octet-stream)

Answer

8.00
2.50
1.00
2.75
0.00
5.25

Question 13

Question

On an option chain, the calls are usually on the [blank_start]left[blank_end] and the puts are on the [blank_start]right[blank_end].

Answer

left
right

Question 14

Question

[blank_start]ITM[blank_end] options are always going to be more conservative, but also more [blank_start]expensive[blank_end] since they will always have some real value priced into the option. [blank_start]OTM[blank_end] options will always be cheaper but more [blank_start]aggressive[blank_end] since the entire price of the option is based on time value.

Answer

ITM
OTM
aggressive
expensive

Question 15

Question

In The Money: Any option with [blank_start]intrinsic value[blank_end] (real value) At The Money OR Near The Money: An option with a strike price that is [blank_start]closest[blank_end] to the current stock price Out The Money: An option that only has [blank_start]extrinsic value[blank_end] (time value)

Answer

intrinsic value
no value
closest
farthest
extrinsic value
market value

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Session II Assessment

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Resource summary

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10

Question 11

Question 12

Question 13

Question 14

Question 15

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	Created by ELITE IIVII almost 6 years ago