Derivative Contracts Open Position Quiz

Play an AI-generated podcast conversation about this lesson

What is an open position in the context of derivative contracts?

A position that is settled and closed on the same day

A position where the investor holds both long and short positions in different contracts (correct)

A position where the investor only holds long positions in various contracts

A position where the investor only holds short positions in various contracts

What does a naked position in the futures market refer to?

A position where the investor holds both long and short positions in the same contract

A position where the investor only holds short positions in any futures contract

A position where the investor only holds long positions in any futures contract

A position where the investor holds a position in futures without holding the underlying asset (correct)

What is a calendar spread position in futures trading?

A position where the investor holds multiple long positions in different contracts

A position where the investor holds only long positions in different maturity contracts

A position where the investor holds only short positions in different maturity contracts

A position where the investor holds a long position in one maturity contract and a short position in another maturity contract (correct)

When does a calendar spread position become an open position?

When either of the offsetting positions is closed or the near month contract expires Signup and view all the answers

In futures trading, what is the term used to describe settling gains or losses each day?

Mark to market settlement Signup and view all the answers

If an investor shorts 8 contracts on Company A and goes long on 5 contracts of Company B, what type of position does the investor have?

Open position Signup and view all the answers

What does opening a position refer to in trading?

Buying or selling a contract to increase the client's open position Signup and view all the answers

In futures contracts, how are the terms of the contracts typically set?

Standardized except for price Signup and view all the answers

What is the counter-party in futures contracts?

The clearing agency associated with the exchange Signup and view all the answers

How does liquidity in futures contracts compare to forward contracts?

Futures have high liquidity while forwards have low liquidity Signup and view all the answers

What is the primary factor that distinguishes opening a long position from opening a short position?

The seller's obligation to buy back the contract in the future Signup and view all the answers

What is the key difference between initial margin and mark-to-market settlement in futures contracts?

Initial margin is based on contract terms, while mark-to-market is based on current market value Signup and view all the answers

What is the meaning of a 'long position' in the derivatives market?

An unsettled buy position in a contract Signup and view all the answers

If a trader buys 3 contracts of Gold futures, what type of position does the trader hold?

Long position Signup and view all the answers

How is the price band for a futures contract determined on the first trading day?

Based on the previous day's closing price of the underlying asset in the cash market Signup and view all the answers

What does a 'short position' refer to in the derivatives market?

An unsettled sell position in a contract Signup and view all the answers

In futures trading, what is the term used for outstanding/unsettled sell positions?

Short position Signup and view all the answers

Derivative Contracts Open Position Quiz

Choose a study mode

Podcast

Questions and Answers