Unit 10 Options

Question 1

Options Timeline:

Answer 1

1. customer must receive OCC Options disclosure document at or before account approval
2. account approved by principal with registered for options
3. client can begin trading options
4. customer must sign and return Options Agreement within 15 DAYS of account approval

Question 2

Options expire on the __________ of the expiration month.

Answer 2

third Friday

Question 3

Uncovered call writing needs

Answer 3

preapproval from ROP

Question 4

Ratio write

Answer 4

investor writes more than one call for every 100 stock owned
unlimited risk

Question 5

Synthetic long stock position

Answer 5

buying call
selling puts

Question 6

Short combination

Answer 6

investor sells both a call and put with different strike prices and different expiration months
neutrality play

Question 7

Horizontal spread

Answer 7

same stike prices, different expirations

Question 8

Vertical spread

Answer 8

same expirations, different strike prices

Question 9

Diagonal spread

Answer 9

different strike price and expirations

Question 10

Butterfly spread

Answer 10

4 options, same expiration, 3 different strike prices

Question 11

FX options in the US use

Answer 11

EPIC

Question 12

FX options outside US use

Answer 12

IPEC

Question 13

A foreign exporter receiving payment in US dollars would _______ in their own currency to hedge.

Answer 13

Buy Calls

Question 14

A US exporter receiving payment in foreign currency would _______ in foreign currency to hedge.

Answer 14

Buy Puts

Question 15

Married Put

Answer 15

when an investor buys a stock and on the same day buys a put, cost basis adjusted upward for the put