Commodity and Derivative

A call option's premium minus its intrinsic value is known as its:

• exercise price

• strike price

• expiration value

• time value

In a call option contract, the price at which the option owner can buy the underlying stock is called the:

• option's premium

• option's exercise price

• option's strike price

• underlying asset's price

Last month, Mary bought a call option on ABC Corp. stock, having an exercise price of $30. Mary paid $1 for this call. Today, ABC stock is trading at $40 per share. Which of the following is true?

• Mary has now realized a $10 profit.

• Mary has now realized a $10 loss.

• Mary's option is out of the money.

• Mary's option is in the money.

A call option exists on the stock of Macroswift Corporation. The exercise price is $45. Right now the call option can be purchased for $7. Macroswift stock is currently selling for $50 per share. What is the current "premium" on the call option?

• $7

• $0

• $3

• $2

A call option exists on the stock of Macroswift Corporation. The exercise price is $45. Right now the call option can be purchased for $7. Macroswift stock is currently selling for $50 per share. What is the "intrinsic value" of the call option?

• $0

• $3

• $2

• $5

When someone "writes" a call option, he/she has:

• taken a "long" position in a futures contract.

• "marked to market" a futures contract.

• sold a call option.

• bought a call option.

When you sell a call option without the underlying stock. The position will give you

• limited risk and limited profit

• limited risk and unlimited profit

• unlimited risk and limited profit

• unlimited risk and unlimited profit

What is European PUT Option

• Gives the holder the obligation to sell underlying asset only at expiry date

• Gives the holder the right to sell underlying asset only at expiry date

• Gives the holder the right to sell underlying asset anytime before expiry date

• Gives the holder the obligation to sell underlying asset anytime before expiry date

OPTION WHICH WE ONLY EXECUTE AT THE TIME OF ITS MATURITY

• AMERICAN OPTION

• EUROPEAN OPTION

• INDIAN OPTION

• NONE

What is the difference between options and futures?

• Futures are about obligations of both parties that they will have to fulfill in the future, whereas options are about obligations of both parties that they have to fulfill at present

• Futures are about rights of both parties, not about obligations, whereas options are about obligations of both parties only

• There is no difference. Futures and options are similar contracts in nature.

• None is correct