Options Trading

What are the two basic types of options?

• Call Option and Put Option

• Buy Option and Sell Option

• Long Option and Short Option

• In the Money Option and Out of the Money Option

Which option position has unlimited profit potential?

• Buying a Call Option

• Selling a Call Option

• Buying a Put Option

• Selling a Put Option

When should you buy a call option or sell a put option?

• When you expect the market to go up

• When you expect the market to go down

• When you expect the market to remain flat

• When you expect high volatility in the market

What is the maximum loss for an option buyer?

• The premium paid

• Unlimited

• The strike price

• The difference between the spot price and the strike price

What is the maximum profit for an option seller?

• The premium received

• Unlimited

• The strike price

• The difference between the spot price and the strike price

What is the intrinsic value of a call option?

• Spot Price - Strike Price

• Strike Price - Spot Price

• Premium Paid - Spot Price

• Premium Paid - Strike Price

What is the intrinsic value of a put option?

• Strike Price - Spot Price

• Spot Price - Strike Price

• Premium Paid - Spot Price

• Premium Paid - Strike Price

What is the classification of an option strike with a non-zero intrinsic value?

• In the Money (ITM)

• Out of the Money (OTM)

• At the Money (ATM)

• Deep In the Money

What is the classification of an option strike with a zero intrinsic value?

• Out of the Money (OTM)

• In the Money (ITM)

• At the Money (ATM)

• Deep Out of the Money

What is the closest strike to the spot price called?

• At the Money (ATM) option

• In the Money (ITM) option

• Out of the Money (OTM) option

• Deep In the Money option