ETF Option Trading Test Answers

(1)  You sell 2 xyz 50 calls at 2.50 - what are the following IF you hold this trade until expiration?

  maximum gain

  xyz breakeven price

  maximum loss

 

(2)  After you sell the 2 calls at 2.50 xyz goes down and you buy 2 45 calls at 2.00 - what is the position type that you now have AND what are the following IF you hold this position until expiration.

  position type

  maximum gain

  xyz maximum gain price

  xyz breakeven price

  maximum loss

  xyz maximum loss price

 

(3)  You do the following trade:  sell 1 xyz 55 call at 2.00-sell 1 xyz 50 put at 2.00 - you hold the trade to expiration AND xyz is 55.50 - what are the following?

  expiration profit or loss amount

  maximum profit

  maximum profit expiration price

  maximum loss

  upside breakeven

  downside breakeven

 

(4)  On 7-25-08 with the underlying at 50.00 with interest at 3% and volatility at 50% - what are the following for the August at the money call and the at the money put?

  atm call theoretical value

  atm call delta

  atm put theoretical value

  atm put delta

 

(5) What would the theoretical values for question4 have been IF the interest rate had been 2% instead of 3%?

  atm call theoretical value

  atm put theoretical value

 

(6)  What would these values be on 8-1-08 with the same underlying price and interest at 3% BUT an increase in volatility to 55%?

  atm call theoretical value

  atm call delta

  atm put theoretical value

  atm put delta

 

(7)  You are long 100 xyz at 48.00 then on 7-25-2008 with the xyz at 51.00 and volatility of 50% you sell 1 august synthetic short at theoretical value - option strikes are every 1 point.  On 7-28-2008 you reversed your long xyz at 49.75 AND on 8-6-2008 with the xyz at 45.00 and volatility at 55% you bought 1 august synthetic long at theoretical value.  Expiration is at xyz 47.00 AND all open trades have been held - what are the following?

  synthetic short strikes

  synthetic short price

  synthetic long strikes

  synthetic long price

  total profit-loss for all trades

 

(8)  On 7-25-2008 with xyz at 50.00 and volatility at 50% - you buy 1 august atm call at the theoretical value with an objective of a 50% option move on the same day - what are the following AND IF the underlying went to 51.50 would you reach your objective?

  target underlying price

  % move from 50.00 to target underlying

  did you reach your objective

 

(9)  On 8-5-2008 xyz is 53.00 and volatility is 47% - what are the following for your question8 call buy?

  option theoretical value

  % option gain

  % above objective

 

(10)  With the underlying at 50.00 at volatility at 50% IF you sold 1 atm call and 1 atm put on 7-25-08 at theoretical value - what would the position type be AND what would the cost of the position be using the theoretical value - what would your upside and downside breakeven points be?

  position type

  position cost

  upside breakeven

  downside breakeven

 

(11)  What would the theoretical value of the question10 position be on 8-3-08 - with an increase in the underlying to 53.00 and a decrease in volatility to 47% - what is the profit-loss in the position at this time?

  position theoretical value

  profit-loss

 

(12)  What would the theoretical value of the question10 position be on 8-3-08 - with a decrease in the underlying to 47.00 and an increase in volatility to 53% - what is the profit-loss in the position at this time?

  position theoretical value

  profit-loss

 

(13)  8-3-08 is a Sunday - would the answers to question11 be the same if the model date was Friday 8-1-08 since the market is closed on the weekend?

  8-3-08 -vs- 8-1-08 model

 

(14)  You are long 200 XYZ at 50.00 AND on 7-29-08 it has gone to 53.00 with volatility of 48%.  Consider that you are now at a 60 minute extreme and that you want to lock your current profits - you have already taken 1 partial at 51.75.  There are option strikes at every point - what is the option trade that you will do AND what are the prices - after the trade is done what is your downside breakeven point if all open trades are held to expiration?

  option trade

  option prices

  downside breakeven

 

(15)  It is 7-25-08 with the xyz in buy mode AND you get a trade setup to go long at 49.75 with volatility at 50% - on 7-28-08 the xyz is at 51.25 with volatility at 47%.  What are the following comparisons with regards to buying 100 xyz OR buying 2 atm call instead?

  atm call theoretical value on 7-25-08

  atm call theoretical value on 7-28-08

  xyz gain on 7-28-08

 

(16)  It is 7-25-08 with the xyz in buy mode AND you get a trade setup to go long at 49.75 with volatility at 50% - on 7-28-08 the xyz is at 51.25 with volatility at 47%.  What are the following comparisons with regards to buying 100 xyz OR buying 1 atm synthetic long instead?

  atm synthetic long theoretical value on 7-25-08

  atm synthetic long theoretical value on 7-28-08

 

(17) You were long 100 xyz at 69.50 AND at the 7-23-08 close with the xyz at 72.00 and volatility 26% - sold 1 august 73 call-bought 1 august 71 put at theoretical value - what are the following?

  option position theoretical value on 7-23-08

  trade position maximum gain at expiration

  trade position maximum loss at expiration

  open position if you exit xyz at 71.00 and hold the options

 

(18)  On 7-29-08 you still have the question17 option position AND went long 100 xyz at 70.00 - what are the following?

  trade position type

  trade position maximum gain at expiration

  trade position maximum loss at expiration

  open position theoretical value on 7-31-08 with volatility at 25.5% and xyz 73.50

  gain IF close position on 7-31-08 at theoretical value