Stock Market Future And Options Quiz Mock Test: Paper 4

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Future and Options Quiz Mock Test (paper 4)

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Total number of questions: 50
Time allotted: 25 minutes
Pass Score: 60%
Certificate: Yes
Random questions: Yes
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1 / 50

1. What does a ratio put write strategy involve?

A) Selling more put options than call options.

B) Buying more put options than call options.

C) Combining put options with different strike prices.

D) Buying and selling an equal number of put and call options.

2 / 50

2. In a ratio calendar spread strategy, what is the ratio typically based on?

A) The time to expiration of the options.

B) The volatility of the underlying asset.

C) The number of contracts traded.

D) The strike prices of the options.

3 / 50

3. What is a covered call strategy?

A) Buying a call option without owning the underlying asset.

B) Selling a call option while simultaneously owning the underlying asset.

C) Selling a call option without owning the underlying asset.

D) Buying a call option while simultaneously buying the underlying asset.

4 / 50

4. What does a ratio spread strategy involve?

A) Trading options with different underlying assets.

B) Combining options with different strike prices.

C) Buying and selling options with different expiration dates.

D) Using options to hedge against currency risk.

5 / 50

5. What is the key characteristic of a long call ladder spread strategy?

A) It has limited profit potential.

B) It is a bearish strategy.

C) It combines long and short positions.

D) It involves only two options.

6 / 50

6. In a short ratio call write strategy, what is the primary risk?

A) Limited profit potential.

B) Inability to generate income.

C) Sensitivity to changes in interest rates.

D) Unlimited loss potential.

7 / 50

7. Which options strategy involves selling both a call option and a put option with the same expiration date but different strike prices?

A) Straddle.

B) Iron butterfly.

C) Strangle.

D) Iron condor.

8 / 50

8. What is the primary goal of an iron condor strategy?

A) To protect against losses in a declining market.

B) To profit from a significant price movement in the underlying asset.

C) To profit from a stable or range-bound market.

D) To generate income through options premiums.

9 / 50

9. What does a diagonal put spread strategy involve?

A) Buying a put option with a longer expiration and selling a put option with a shorter expiration.

B) Selling both call and put options.

C) Buying a call option with a longer expiration and selling a call option with a shorter expiration.

D) Combining a call option and a put option.

10 / 50

10. What is the key feature of a broken wing butterfly spread strategy?

A) It provides unlimited risk.

B) It involves only call options.

C) It has a skewed profit potential.

D) It combines options with different expiration dates.

11 / 50

11. What is the primary goal of a covered straddle strategy?

A) To profit from a stable market.

B) To generate income through options premiums.

C) To create a neutral position.

D) To profit from a large price movement in either direction.

12 / 50

12. What is the primary objective of a long straddle strategy?

A) To profit from a stable market.

B) To limit risk.

C) To generate income through options premiums.

D) To profit from a large price movement in either direction.

13 / 50

13. What is the primary goal of a jade lizard strategy?

A) To create a neutral position.

B) To profit from a large price movement in either direction.

C) To generate income through options premiums.

D) To profit from a stable market.

14 / 50

14. What is the primary goal of a bull put spread strategy?

A) To hedge against market volatility.

B) To generate income through options premiums.

C) To profit from a bullish price movement in the underlying asset.

D) To profit from a bearish price movement in the underlying asset.

15 / 50

15. What is the primary objective of a short ratio put spread strategy?

A) To create a neutral position.

B) To generate income through options premiums.

C) To profit from a stable market.

D) To profit from a large price movement in either direction.

16 / 50

16. What is the primary risk in a butterfly spread strategy?

A) Sensitivity to changes in interest rates.

B) Limited profit potential.

C) Inability to generate income.

D) Unlimited loss potential.

17 / 50

17. What is the risk in a naked call writing strategy?

A) Unlimited, as the underlying asset's price can rise indefinitely.

B) Limited to the strike price of the call option.

C) Limited to the premium received from selling the call option.

D) Limited to the difference between the strike price and the market price of the underlying asset.

18 / 50

18. What is the primary risk in a long strangle strategy?

A) Limited profit potential.

B) Unlimited loss potential.

C) Inability to generate income.

D) Sensitivity to changes in interest rates.

19 / 50

19. What does a reverse iron butterfly strategy involve?

A) Buying both call and put options.

B) Combining a call option with a put spread.

C) Combining a call spread with a put option.

D) Selling both call and put options.

20 / 50

20. What does an unbalanced butterfly spread strategy involve?

A) Selling both call and put options.

B) Buying more call options than put options.

C) Buying an equal number of call and put options.

D) Buying more put options than call options.

21 / 50

21. What is the key characteristic of a calendar straddle strategy?

A) It provides unlimited profit potential.

B) It combines options with different expiration dates.

C) It involves buying both call and put options.

D) It is a bullish strategy.

22 / 50

22. What does a ratio call backspread strategy entail?

A) Combining call and put options.

B) Buying more call options than are sold.

C) Selling both call and put options.

D) Selling more call options than are bought.

23 / 50

23. What is the primary objective of a collar strategy?

A) To generate income through options premiums.

B) To protect an existing stock position.

C) To profit from a large price movement in either direction.

D) To profit from a stable market.

24 / 50

24. In a protective put strategy, what does the investor typically do?

A) Buy a put option to protect against a potential decrease in the underlying asset's price.

B) Sell a put option to generate income.

C) Sell a call option to hedge against an increase in transaction costs.

D) Buy a call option to speculate on an increase in the underlying asset's price.

25 / 50

25. What does a jade lizard strategy involve?

A) Selling a naked put option.

B) Combining a call spread and a put option.

C) Combining a call option and a put spread.

D) Selling a naked call option.

26 / 50

26. What is the primary risk in a short straddle strategy?

A) Limited profit potential.

B) Unlimited loss potential.

C) Inability to generate income.

D) Sensitivity to changes in interest rates.

27 / 50

27. What is the primary objective of an iron fly strategy?

A) To profit from a large price movement in either direction.

B) To generate income through options premiums.

C) To profit from a stable market.

D) To create a neutral position.

28 / 50

28. What is the primary objective of a ratio put spread strategy?

A) To create a neutral position.

B) To profit from a large price movement in either direction.

C) To generate income through options premiums.

D) To profit from a stable market.

29 / 50

29. What is the primary risk in a long iron condor strategy?

A) Sensitivity to changes in interest rates.

B) Limited profit potential.

C) Unlimited loss potential.

D) Lack of flexibility.

30 / 50

30. What are barrier options primarily known for?

A) Allowing early exercise.

B) Providing insurance against market volatility.

C) Having fixed strike prices.

D) Offering the highest returns.

31 / 50

31. In a debit spread strategy, what does the investor typically do?

A) Receive a credit for opening the position.

B) Pay a debit or cost for opening the position.

C) Buy and sell options with the same strike price.

D) Use options to hedge against currency risk.

32 / 50

32. In a long iron albatross strategy, what is the primary source of income?

A) Selling a put spread.

B) Selling a naked put option.

C) Selling a call spread.

D) Selling a naked call option.

33 / 50

33. What type of options are most commonly traded on stock exchanges?

A) Barrier options.

B) American options.

C) Asian options.

D) European options.

34 / 50

34. What is the main characteristic of a butterfly spread strategy?

A) It has unlimited profit potential.

B) It is always a bullish strategy.

C) It is suitable for highly volatile markets.

D) It involves three strike prices.

35 / 50

35. What is the primary goal of a double diagonal spread strategy?

A) To profit from a large price movement in either direction.

B) To generate income through options premiums.

C) To create a neutral position.

D) To profit from a stable market.

36 / 50

36. What is the main characteristic of a long iron butterfly strategy?

A) It combines options with different expiration dates.

B) It provides unlimited profit potential.

C) It involves buying and selling call options.

D) It is a bullish strategy.

37 / 50

37. What does a collar strategy involve?

A) Simultaneously buying a call option and selling a put option.

B) Selling a call option and buying a put option with the same strike price.

C) Buying a call option and selling a put option with the same strike price.

D) Buying a call option and buying a put option with different strike prices.

38 / 50

38. What does a ratio call spread strategy involve?

A) Buying and selling options with different expiration dates.

B) Combining options with different strike prices.

C) Trading options with different underlying assets.

D) Using options to hedge against currency risk.

39 / 50

39. What is the primary goal of a covered put strategy?

A) To protect an existing short position.

B) To profit from a bullish price movement in the underlying asset.

C) To profit from a bearish price movement in the underlying asset.

D) To generate income through options premiums.

40 / 50

40. What is the key feature of Asian options?

A) They have fixed strike prices.

B) They can be exercised at any time before expiration.

C) They are only available in Asian markets.

D) Their payoff is based on the average price of the underlying asset over a specified period.

41 / 50

41. What is the primary objective of a diagonal spread strategy?

A) To profit from a large price movement in either direction.

B) To generate income through options premiums.

C) To create a neutral position.

D) To profit from a stable market.

42 / 50

42. What is the primary objective of a straddle strategy?

A) To profit from an upward price movement in the underlying asset.

B) To profit from a downward price movement in the underlying asset.

C) To generate income through options premiums.

D) To profit from a large price movement in either direction.

43 / 50

43. What is the primary objective of a calendar spread strategy?

A) To profit from a large price movement in the underlying asset.

B) To take advantage of differences in implied volatility.

C) To generate income through options premiums.

D) To hedge against interest rate changes.

44 / 50

44. What is the primary advantage of an unbalanced iron condor strategy?

A) It requires no initial investment.

B) Unlimited profit potential.

C) High sensitivity to interest rate changes.

D) Limited risk.

45 / 50

45. What is the primary advantage of an iron butterfly strategy?

A) Unlimited profit potential.

B) It requires no initial investment.

C) It works well in highly volatile markets.

D) Limited risk, limited reward.

46 / 50

46. What is the primary goal of an iron albatross strategy?

A) To profit from a large price movement in either direction.

B) To generate income through options premiums.

C) To profit from a stable market.

D) To create a neutral position.

47 / 50

47. What is the primary goal of a ratio call write strategy?

A) To profit from a large price movement in either direction.

B) To profit from a stable market.

C) To generate income through options premiums.

D) To create a bearish position.

48 / 50

48. What is the primary risk in a short strangle strategy?

A) Unlimited loss potential.

B) Inability to generate income.

C) High sensitivity to interest rate changes.

D) Limited profit potential.

49 / 50

49. Which type of options contract allows the holder to choose the exercise style (American or European) at the time of exercise?

A) Hybrid options.

B) Multi-leg options.

C) Vanilla options.

D) Exotic options.

50 / 50

50. What is the primary advantage of European options for the option writer (seller)?

A) Higher premium income.

B) Lower risk of early exercise.

C) Lower transaction costs.

D) Greater flexibility in choosing strike prices.

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