Question in attachment need answers fast
Question 1
It is March and a trader buys 100 August call options (=1 option contract) with a strike price of $26. The stock price is $27.32 and the option price is $5.61.
At the expiration, the stock price becomes $31.44. Calculate the option profit to the trader.
If a loss, then enter a negative value. For example, if the loss is $123.45, then enter "-123.45".
Question 2
On May 20th, a trader buys two hundred December put options (= 2 option contracts) with a strike price of $20. The stock price is $19.67 and the option price is $5.80.
At the expiration, the stock price becomes $18.51. What is the option profit to the trader?
If it is a loss, then enter a negative value. For example, if the loss is $123.45, then enter "-123.45".
Question 3
Lehman Bros. went bankrupted during the 2008 financial crisis.
True | |
False |
Question 4
Bear Stearns was tken over by J.P. Morgan in the 2008 financial crisis.
True | |
False |
Question 5
European style option can only be exercised at the expiration.
True | |
False |
Question 6
American style option can be exercised before expiration.
True | |
False |
Question 7
_____________ is a right to buy a stock at a strike price on or before a maturity date.
European put option | |
American call option |
European call option | |
American put option |
Question 8
If the stock price becomes $80 at expiration, which security will yield the highest rate of return (=profit / cost)?
put option with $90 exercise price, cost = $15 | |
put option with $80 exercise price, cost = $8 |
put option with $70 exercise price, cost = $4 | |
underlying stock, cost = $80 |
Question 9
If the stock price becomes $100 at expiration, which option will yield the highest rate of return (=profit / cost)?
call option with $70 exercise price, cost = $14 | |
call option with $80 exercise price, cost = $9 |
call option with $90 exercise price, cost = $6 | |
underlying stock, cost = $80 |
Question 10
When one buys an option, he has to find another trader who wants to write the option.
True | |
False |