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series 3 > series 3 > Flashcards

series 3 Flashcards

1
Q

globex

A

cme / electronic platform / side by side / open outcry

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2
Q

fut on ICE

A

based in london, but can be exchanged with NY

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3
Q

risk disclosure doc

A

must be signed BEFORE account opened

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4
Q

OPTION disclosure doc

A

must show components of option premium [time value and intrinsic]. but NOT the actual premium

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5
Q

opening acct

A

if customer does not disclose certain info, can still open acct

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6
Q

cash acct

A

not allowed for commodities

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7
Q

margin agmt

A

MUST be signed by all clients

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8
Q

FCM capital requirement

A

$1,000,000

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9
Q

IB capital requirement

A

$45,000

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10
Q

books + records

A

5 yrs

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11
Q

Position limits

A

speculators only

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12
Q

churning

A

excess trading to generate commissions

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13
Q

block orders

A

allocation must be done before end of day; not required to be specified at time of order

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14
Q

disclosure document

A

can be used 12 months from effective date

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15
Q

AP can work with how many FCMs?

A

2, if approval received

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16
Q

breakout of support

A

bearish

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17
Q

breakout of resistance

A

bullish

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18
Q

h&s top

A

reversal - bearish

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19
Q

inverted h&s (bottom)

A

bullish

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20
Q

convergence of spot and fut

A

must happen by first day delivery

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21
Q

costs of carry

A

storage, financing, insurance. NOT transport

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22
Q

1% of 100,000
1/32 of $1000

A

$1,999
$31.25

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23
Q

optns on tnotes and tbonds

A

1/64

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24
Q

t bills / eurodollar

A

quoted in bps, 1 bp - $25

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25
Q

who establishes margin?

26
Q

is margin diff for long and short pos?

27
Q

hedging vs speculating margin

A

smaller for hedging.

28
Q

margin requirements

A

calculated daily / based on settlement vlaue

29
Q

equity < maintenance margin

A

restore to initial margin

30
Q

pyramiding

A

use excess equity on other positions to meet margin req on new positions

31
Q

spread

A

sell one fut contract and buy another

32
Q

type of spread

A

intramarket/interdelivery - same exch, diff mo
intermarket - diff exch but same commod and mo
intercommodity - 2 diff commod

33
Q

spreaders sentiment

A

look @ near month. meaning if bullish, go long near month

EXCEPTION is stock index futures / fx spreads

34
Q

spreads - widen / narrow

A

long expensive - WIDEN
short expensive - NARROW

35
Q

NOB spread

A

create offsetting positions in 3 year t bond fut and 10 year t note fut.

if long term rates are falling faster than intermediate term rates, do NOB spread by shorting t note futures and long t bond fut

36
Q

basis

A

Producers, long commodity, short fut, long basis = STRENGTHEN = more pos
Consumers, short commodity, long fut, short basis = WEAKEN = more neg

37
Q

effective selling price

A

cash now + profit on hedge OR cash now - loss on hedge

38
Q

effective selling price or cost

A

effective selling price = producer. effective cost = consumer

39
Q

index fut

A

hedge positions against systematic risk. settled for cash

multiplier: sp500 = 250, emini 50

can offset sp500 contract with equivalent amt of emini

40
Q

synthetic long call

A

long call = long put+ long fut

41
Q

conversion

A

combine all from synthetic long call ->
long call = long f

41
Q

conversion

A

start from synthetic long call MOVE EVERYTHING TO THE RIGHT->
long call = long put + long fut
subtract long call, = long put + long fut - short call

42
Q

reversal

A

start with synthetic long call+ MOVE EVERYTHING TO THE LEFT->
long call = long put + long fut
long call - short put - short fut

43
Q

european vs american option

A

european can be exercised ONLY business day before ex
american can be exercised any time

44
Q

order // time stamp

A

within 1 min of receipt by FCM

45
Q

ITM, options

A

call, when market > strike
put, when market < strike

46
Q

premium

A

intrinsic value + time value

47
Q

what influences time value

A

time til expiration and vol of underlying

48
Q

long straddle

A

vol trade. buy both call and put

49
Q

short straddle

A

S for stability. sell call and put

50
Q

do banks have to join NFA?

51
Q

performance history

A

just need 5 years, or life of pool if > 3 yrs.

SO 4 years need all pools

52
Q

switch order

A

offset existing position and roll into later month

53
Q

delta

A

delta increase for calls when market rises

ITM optiosn have delta close to 1.

OTM close to 0

As market rises, calls become deeper in the money and rise to 1

54
Q

backwardated mkt

A

backwardated caused by tight supply/shortage

55
Q

eurodollar settlement

56
Q

vertical spread

A

same optn, same exp , diff strike

buy call / sell call

57
Q

horizontal spread

58
Q

cpo account statements

A

at least qtly

NAV > 500K, monthly

59
Q

maintenance margin

A

if equity < maintenance margin, margin call

series 3 (1 decks)

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