Question 1It is March and a trader buys 100 August call options (=1 option contract) with a strike price of $27. The stock price is $26.95 and the option price is $5.18.At the expiration, the stock p

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