$1.$ To prevent arbitrage opportunities, the cost of any option strategy $($an option spread or combination$)$ must be positive $($i$.$e$.$ create a cash outflow$)$

$-$ True$/$False

$2.$ Suppose you own a share of stock that you plan to own for the long term and whose value you$$d like to insure. The current spot price of the stock is $$60.$ Which of the following option positions will you choose?

$-$ A short position in the $70-$strike call

$-$ A short position in the $50-$strike put

$-$ A long position in the $70-$strike call

$-$ A long position in the $50-$strike put

$-$ A long position in the $70-$strike put

$3.$ The spot price of Google stock is currently $$2\mathrm{.}855.$ Which of the following options are out of the money?

$1.$ $$2,000-$strike put

$2.$ $$3,500-$strike call

$3.$ $$2,000-$strike call

$4.$ $$2,500-$strike put

$5.$ $$3,000-$strike call

A$.$ I, II$,$ IV & V only

B$.$ III only

C$.$ None of the options are out$-$of$-$the money

D$.$ All of the options are out$-$of$-$the money

E$.$ II$,$ IV & V only

$4.$ A client comes to you and says that they believe that the volatility of a stock will fall and the price won$$t charge much in either direction. Which of the following strategies will you consider offering them?

$1.$ The short strangle $($short one OOM call & short one OOM put$)$

$2.$ The butterfly spread $($long one OOM call, short two ATM calls, & long one ITM call$)$

$3.$ The bear spread $($long one ATM call & short one ITM call$)$

$4.$ The short calendar spread $($short one distant ATM call & long one nearby ATM call$)$

A$.$ I, II$,$ III, & IV

B$.$ I, II & III only

C$.$ II only

D$.$ II & III only

E$.$ II & IV only