Options

Question 1

Buyers - Calls

Answer 1

Have the right to buy
Want the stock price to go up
Bullish

Question 2

Buyers - Puts

Answer 2

Have the right to sell
Want stock price to fall
Bearish

Question 3

Sellers - Calls

Answer 3

Have the obligation to sell
Want stock price to fall
Bearish

Question 4

Sellers - Puts

Answer 4

Have the obligation to buy
Want stock price to rise
Bullish

Question 5

What Does each part of this order this mean:

BUY 1 XYZ JUNE 50 CALL @ 7

Answer 5

• Action to be taken
• # of contracts (100 shares per contract)
• Security Name
• Expiration Month
• Stroke Price
• type of options call or put
• premium per share

Question 6

Calls - in the money

Answer 6

Stock price is higher than the strike price

Question 7

Calls - at the money

Answer 7

Stock price is equal to the strike price

Question 8

Calls - out the money

Answer 8

Stock price Less than Strike Price

Question 9

Puts - in the money

Answer 9

Stock Price is lower than the strike price

Question 10

Puts - at the money

Answer 10

Stock price is equal to the strike price

Question 11

Puts - out the money

Answer 11

Stock price higher than the strike price

Question 12

Intrinsic Value

Answer 12

The in the money amount

Question 13

Time Value

Answer 13

The amount by which the premium exceeds the intrinsic value