Options Trading Basics

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Questions and Answers

What action does the Exchange take when the aggregate open interest exceeds 95% of the market wide position limit for a scrip?

  • Resumes normal trading in the scrip
  • Imposes a trading halt in the scrip
  • Takes note of open positions of all clients/TMs and allows them to trade only to decrease their positions (correct)
  • Takes note of open positions of all clients/TMs and allows them to increase their positions

What is the primary objective of the Securities Contracts (Regulation) Act, 1956?

  • To govern the trading of securities in international markets
  • To prevent undesirable transactions in securities (correct)
  • To promote undesirable transactions in securities
  • To regulate the stock exchanges in India

What is the criterion for resuming normal trading in a scrip?

  • When the open interest is zero
  • When the aggregate open interest comes down to 80% or below of the market wide position limit (correct)
  • When the aggregate open interest exceeds 100% of the market wide position limit
  • When the aggregate open interest comes down to 90% of the market wide position limit

What is disseminated by the Exchange at the end of each day?

<p>Aggregate open interest across all Exchanges in the futures and options on individual scrips (B)</p> Signup and view all the answers

What is defined in Section 2(h) of the SCRA?

<p>The term 'securities' (B)</p> Signup and view all the answers

What happens when the Exchange finds that the aggregate open interest exceeds 95% of the market wide position limit for a scrip?

<p>The Exchange takes note of open positions of all clients/TMs (D)</p> Signup and view all the answers

What is the market wide position limit related to?

<p>A scrip (A)</p> Signup and view all the answers

What is the purpose of the Exchange disseminating the aggregate open interest?

<p>To test whether the aggregate open interest exceeds 95% of the market wide position limit (A)</p> Signup and view all the answers

What is governed by the Securities Contracts (Regulation) Act, 1956?

<p>Trading of securities in India (D)</p> Signup and view all the answers

What is the consequence of the aggregate open interest exceeding 95% of the market wide position limit?

<p>The Exchange takes note of open positions of all clients/TMs and they can trade only to decrease their positions (C)</p> Signup and view all the answers

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