Question
4. Options on futures are: A. usually offset before expiration B. wasting assets C. traded on regulated commodity exchanges such as CME CBOT NYMEX or
4. Options on futures are: A. usually offset before expiration B. wasting assets C. traded on regulated commodity exchanges such as CME CBOT NYMEX or COMEX D. all of the above
5. The premium of an option is: A. set by the exchange staff B. unaffected by futures prices C. determined by buyers and sellers reflecting supply and demand
6. The exercise price is: A. the number of days remaining in the life of an option B. the number of contracts you can exercise C. the price at which the option holder may go long (calls) or short (puts) the underlying futures
7. The different strike prices are set by: A. option sellers B. option buyers C. the Exchange
8. Intrinsic value for call options is calculated by: A. futures price minus the exercise price B. exercise price minus the futures price C. futures price minus the call premium
9. The breakeven point for a call option purchase is: A. strike price plus days to expiration B. futures price plus the call option premium C. strike price plus the call option premium
10. Options can be used by: A. speculators desiring to profit from a market move with limited risk B. hedgers wishing to protect themselves against adverse price moves C. both A and B
11. Sellers of options: A. should be aware of the risks involved with selling options B. can lose large sums of their trading capital C. must meet performance bond requirements D. all of the above 16 | CME Group Options on Futures | The Basics
12. To take advantage of a rising market one could: A. sell call options on futures B. buy call options on futures C. sell futures contracts
13. If a trader pays 4.00 pts. for an option on the CME S&P 500 futures, the most they could lose is: A. 4.00 pts. B. 8.00 pts. C. losses could be unlimited
14. A speculator who is considering the purchase of a put option will: A. pay the entire premium up front B. put up performance bond funds C. profit if the market advances on him
15. CME Group Exchanges offer options on: A. equity products B. foreign currency products C. agricultural products D. interest rate products E. all of the above
16. If an option buyer exercises a call option on a futures contract, the resulting position will be: A. a long futures position B. a short futures position C. a neutral position
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started