Chap 3 Call Writing

Question 1

Calendar Spread

Answer 1

Buying a call and at the same time selling another call with the same striking price but shorter expiration date

Question 2

Delta

Answer 2

The amount by which a call will increase or decrease in price if the underlying stock moves by 1 point

Question 3

Rolling

Answer 3

Closing part of a position and replacing it with another option to create a new position

Question 4

Spread

Answer 4

Being long on call and short a different call on a stock at the same time

Question 5

Rolling Down

Answer 5

A means for a call buyer to lower the break-even point by creating a bull spread

Question 6

The strategy of rolling down to a bull spread has the effect of Blank the break-even point for a position

Answer 6

Lowering

Question 7

The success of call buying depends on the ability to BLANK

Answer 7

Select stocks that will go up in price and to time the selection reasonably well

Question 8

The BLANK changes every time the underlying stock changes even fractionally in price

Answer 8

DELTA

Question 9

If the holder of an intermediate or long-term call sells a near-term call with the same striking price as the call already owned a BLANK has been created

Answer 9

Calendar Spread

Question 10

An option with a lower delta is more well suitable for what duration of trade?

Answer 10

long-term trading

Question 11

The strategy of selling a call the investor is currently long and buying another call at the next higher striking price is called

Answer 11

Rolling up

Question 12

One should usually not risk more than what % in call buying

Answer 12

15%