11 Questions
What is the profit from buying one European call option as per the provided information?
$90
What is the profit from writing one European call option with a strike price of $100?
$70
What is the profit from buying a European put option with a strike price of $70?
$20
What is the profit from writing a European put option with a strike price of $70?
$-10
What is the key difference between options and futures/forward contracts?
Futures/forward contracts involve an obligation with no upfront fee, while options give the right but not the obligation with an option premium.
In a call option, when does an investor buy a call option?
To buy the underlying asset at a predetermined price
What is the relationship between the buyer and seller in options contracts?
Buyer has a long position, and seller has a short position
In a forward contract, when does the settlement typically occur?
At the end of the contract
What is the main difference between futures and forwards contracts?
Futures contracts are exchange-traded, while forwards are private contracts.
What is the pay-off from a long position in a futures contract based on?
$ST - K$
What does an options contract provide the buyer with?
The right without obligation to buy or sell at a fixed price
Test your knowledge on calculating profits from different options positions including long call, long put, short call, and short put. Calculate profits from buying and writing European call options with specific parameters like option price, strike price, and option life.
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