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27 Cards in this Set
- Front
- Back
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The value of an option is dependent upon the value of the underlying security. This relationship defines an option as which one of the following?
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derivative security
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A call option grants its owner which one of the following?
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right to buy
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By definition, a put option grants its owner which one of the following?
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right to sell
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Which one of the following is defined as the price at which an option will be exercised?
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strike
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Which one of the following distinguishes an option as an American style option?
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option that can be exercised at any time prior to expiration
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Which one of the following is defined as an option that can only be exercised at expiration?
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European style option
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A list of available option contracts and their prices for a particular security listed in order of strike price and maturity date is referred to as which one of the following?
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option chain
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Which one of the following guarantees that the terms of an exchange-listed option contract are fulfilled when an option is exercised?
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Options Clearing Corporation
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By definition, stock index options would include an option on which one of the following underlying assets?
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S&P 500
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A cash-settled option is defined as an option which does which one of the following?
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entails a cash payment to the holder upon exercise
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Which one of the following terms is defined as an option that would have a positive payoff if exercised now?
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in-the-money option
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An option that would NOT yield a positive payoff if exercised today is referred to by which one of the following terms?
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out-of-the-money option
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Which one of the following terms is defined as the payoff that would be received if an option were expiring immediately?
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intrinsic value
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Which one of the following is equal to the option premium minus the intrinsic value?
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time value
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Which one of the following refers to selling an option contract?
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writing
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Which of the following has the obligation to sell a stock at the strike price when an option is exercised?
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call writer
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Which of the following has the obligation to purchase stock at the strike price when an option is exercised?
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put writer
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You currently own 300 shares of Microsoft stock. If you purchase options on this stock to protect against future declines in the price of the stock you are implementing which one of the following?
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protective put
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Selling a call option on stock which you own is referred to as which one of the following strategies?
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covered call
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Kris implemented an option trading strategy consisting of two call options. This strategy is known as which one of the following?
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spread
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An option trading strategy that utilizes both put and call options is referred to as which one of the following?
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combination
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Consider both a European put and call that expire in June and have a strike price of $30. The no-arbitrage relationship between this put and call is referred to as which one of the following?
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put-call parity
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Louise just purchased 3 call option contracts on GE stock. How many shares of stock can she buy at the strike price based on these contracts?
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300
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How much option premium per share will you receive if you sell a September $34 put on General Electric stock?
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2.52 24-27 MATH-ish
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28. Which of the following characteristics are correct regarding the old style option quotation system?
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I. The system is known as OPRA - the Options Price Reporting Authority code
II. The system has 3 data elements IV. The system has 5 characters |
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29. Which of the following characteristics are correct regarding the new style option quotation system?
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III. The system has 21 characters
V. The system is known as the OCC Series Key VI. The root symbol is the underlying stock's ticker symbol |
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30. The change in the option symbol quotation system was driven by which of the following?
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I. Advances in technology
II. Increase in the number and type of option products III. Difficulty in applying the old system to NASDAQ stocks IV. Difficulty in applying the system to complicated option products |
