MIT Quiz - Let's Assess Your Options Knowledge

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Education Mitigates Risk

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Assumptions For Questions #1 - #5

Stock Price = $50

Expiration in 5 days

Volatility = 35%

1. What is the Delta of the $50 strike call? *

2 points

.25

.50

-.33

1.50

Isn't Delta an airline?

2. What strike put has the highest Gamma? *

1 point

$20

$30

$50

$55

You mean like Gamma Rays from outer space?

3. You're long the $52-strike call one hour before expiration - what should you do? *

1 point

Nothing

Sell Stock

Exercise the option

Buy more options

Use a lifeline & phone a friend

4. You own the $52 strike put and it is worth $2.64 - what is the extrinsic value of your option? *

1 point

Option 1

$2.64

$.64

$0.00

I'm an introvert so how would I know?

5. If you buy five (5) of the $48 strike puts for $1.50 each, what is the maximum you can lose on the trade? *

1 point

$1.50

$5,000

$200

$750

I would never take the trade because there is unlimited risk

8. Which of the following is a bullish vertical spread? *

1 point

Buy a $50 strike call and a $50 strike put

Sell a $50 strike call and buy a $52 strike call

Buys a $50 strike call and sell a $55 strike call

Buy a $50 put and sell a $48 put

The only spread I'm looking for is at a summer picnic

9. You are long calls on 10 different technology stocks; which is the best choice below to protect your portfolio from a big sell-off? *

1 point

Buy calls on the $SPY

Buy the stock underlying each option position

Buy puts on the $QQQ

Sell puts on the $QQQ

I already have hedges along my front walk

A covered call options strategy is when a trader buys the underlying stock and sells out-of-the-money options - which best describes this trade? *

1 point

A purely bullish trade with unlimited potential profits

A bullish trade that is also a long volatility play

A bearish trade that is also long volatility play

A bullish trade that is also a short volatility play

A bearish trade that is also short volatility play

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