
Options Scenarios
Flashcard
•
Business
•
9th - 12th Grade
•
Practice Problem
•
Hard
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6 questions
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1.
FLASHCARD QUESTION
Front
What is the maximum profit from selling a call option with a $190 strike price on 100 shares of Apple (AAPL) at $180, collecting a $3 premium per share?
Back
$1300
Answer explanation
Explanation: ($190 - $180) + $3 premium = $13/share × 100 = $1,300
2.
FLASHCARD QUESTION
Front
You sold a covered call on 100 shares of Coca-Cola (KO) with a $65 strike. The stock rises to $70 before expiration. What happens?
Back
Your shares are called away at $65
Answer explanation
Shares are sold at strike, not market price.
3.
FLASHCARD QUESTION
Front
You sell a cash-secured put on Microsoft (MSFT) with a $300 strike, expiring in 2 weeks, and receive a $4 premium. The stock falls to $290 by expiration. What happens?
Back
You are assigned and sell the stock at $300
Answer explanation
Shares are sold at strike, not market price.
4.
FLASHCARD QUESTION
Front
You sell a $150 strike put on a stock trading at $155. The stock rises to $160 by expiration. What is your outcome?
Back
You keep the premium and avoid buying the stock
5.
FLASHCARD QUESTION
Front
You buy a LEAPS call on Tesla (TSLA) with a $250 strike price, expiring in 18 months. You paid $25 per share. TSLA rises to $320 in a year. Why might you hold the LEAPS instead of exercising it?
Back
It still has significant time value
6.
FLASHCARD QUESTION
Front
You buy a LEAPS call with a $50 strike on a growth stock. One year later, the stock is at $70, and your option is worth $23 (you paid $10 originally). What is your profit per share if you sell the option now?
Back
$13
Answer explanation
$23 - $10 = $13 per share
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