1)If an individual believes a stock will increase in value, they should buy what type of option?

Upward option

Call option

Put option

Value option

2)Which option will have the highest value?

They are all the same value

Out-of-the-money (OTM)

At-the-money (ATM)

In-the-money (ITM)

3)Company ABC is currently trading at $102.12 in March 2021. An option trader purchases a call option with a $100 strike price for $12.20, expiring in June 2021. What is the intrinsic value of this option in March 2021?

4)Company ABC is currently trading at $102.12 in March 2021. An option trader purchases a put option with a $100 strike price for $3.52, expiring in June 2021. What is the extrinsic value of this option in March 2021?

5)Calculate the delta for company ABC using the following information: On July 4th, the stock price of ABC was $13.20 and the respective put option was trading at $3.19. On July 5th, the stock price of ABC was $12.44 and the respective put option was trading at $3.52. What is the delta?

6) Which of the following will decrease the price of a call option? Select all that apply.

A decrease in the time to expiry

An increase in the underlying price

An increase in dividends

A decrease in volatility

7)

If an investor currently has 100 shares of ABC and believes the stock will decline in the next few weeks, what strategy should they perform?

Strangle

Collar

Protective put

Outright call purchase

8)

Which of the following statements are true about the difference between bear put spreads and bull call spreads?

All the statements are correct

The bull call spread uses leverage while the bear put spread does not use leverage

The option trader may lose more money than the cost of the spreads (cost of the trade)

The bear put spread has a targeted bearish view while the bull call spread has a targeted bullish view

9)

An option trader heard rumors of a massive merger taking place in the near future (one company is purchasing another company). The trader is unsure of whether or not the stock will increase or decrease in value (and believes both are equally as likely to happen), but believes the stock will move by 30%. Which type of strategy should the trader pursue?

Put writing

Bull call spread

Bear put spread

Straddle