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Options Trading Quiz For Beginners [2022]

OPTIONS TRADING QUIZ COVER
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originally published here: Options Trading Quiz For Beginners [2022]

Want to test your knowledge in stock options trading? Take this quick options trading quiz. It has just 15 questions. Can you score a perfect 15 here? Give it a try now!

OPTIONS TRADING QUIZ

Results

Page Contents

Page Contents

#1. What is one main benefit of stock options?

#2. What is one main benefit of stock options?

#3. When do we buy a Call Option?

#4. When do we buy a put option?

#5. What is the relationship between Option Premium and Time Remaining on Contract?

#6. What is the breakeven price (or breakeven point) of a call option?

#7. What is the breakeven price of a put option, on a share trading at $99, with strike price $95 that costs (premium) $3 per share?

#8. An option chain has the same:

#9. In American Style options, you can exercise option ONLY on the last trading day before expiration. (T/F))

#10. What is true about potential profits on stock options?

#11. Which of these trades is 'bullish' in nature?

#12. What is the advantage of the Options Wheeling Strategy?

#13. What is a benefit of selling a put option?

#14. If you write a covered call option, on a stock trading at $120 per share, with strike price $135 and collect $5 premium, what happens on option expiration date? Choose the INCORRECT option.

#15. Which of the following have intrinsic value?

#16. Option’s Implied Volatility can be used to determine an expected price range of a stock with what probability?

Finish

Some Resources to help you get better at the Options Trading Quiz

Blog Posts: For Beginner Level

Call vs Put Options: Easy and Informative 5 Minute Guide

How To Buy A Long Call Option on 100 Shares: Step-by-Step Guide

How To Buy A Long Put Option on 100 Shares: Step-by-Step Guide

Options Greeks Cheat Sheet: 4 Greeks – Delta, Gamma, Theta, Vega

Options Trading Levels: 4 Approval Levels For Easy Risk Management

Blog Posts: For Intermediate Level

Bear Call Spread vs Bull Call Spread: Easy 5 Point Comparison

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Bear Put Spread vs Bull Put Spread: Easy 5 Point Comparison

Choose Your Options Strategy Wisely: Comprehensive List of 25 Strategies

Straddle vs Strangle Options: Explained In 5 Minutes

OPTIONS TRADING QUIZ QUESTIONS (PRINTABLE)

1. What is a benefit of selling a put option?

  • Earn premium on cash 
  • You don’t require money to place the trade 
  • Buy stock at the lowest possible price during flash crashes

2. Which of the following have intrinsic value?

  • Call options with strike price less than the stock (share) price
  • Put options with strike price less than the stock (share) price
  • Both call and put options with strike price higher than the stock (share) price
  • All FAANG (Facebook, Apple, Amazon, Netflix, Google) stock options

3. What is the advantage of the Options Wheeling Strategy?

  • Can collect premiums on a regular basis
  • This is a risk-free strategy
  • By using this strategy, stocks keep going up.

4. An option chain has the same:

  • Underlying Stock and Expiration Date
  • Gamma and Theta
  • Strike Price and Premium
  • Premium and Delta

5. What is one main benefit of stock options?

  • Diversification
  • Low Volatility
  • Leverage

6. In American Style options, you can exercise option ONLY on the last trading day before expiration. (T/F))

  • FALSE 
  • TRUE

7. Option’s Implied Volatility can be used to determine an expected price range of a stock with what probability?

  • 98%
  • 95%
  • 48%
  • 68%

8. When do we buy a Call Option?

  • When we expect the stock price to go down
  • When we expect the stock price to go up
  • When we expect the stock price to trade sideways

9. What is the breakeven price of a put option, on a share trading at $99, with strike price $95 that costs (premium) $3 per share?

  • $92
  • $99
  • $96
  • $98

10. Which of these trades is ‘bullish’ in nature?

  • Buying a put option
  • Selling a cash-secured put option
  • Staying out of the stock market and saving money in a savings account
  • Selling a covered call option

11. What is true about potential profits on stock options?

  • In call and put options, the potential profit is limited to ‘stock price + strike price’
  • In call option, the potential profit is unlimited. In put option, the potential profit is limited.
  • In call option, the potential profit is unlimited. In put option, the potential profit is unlimited.
  • In call option, the potential profit is limited. In put option, the potential profit is unlimited.

12. If you write a covered call option, on a stock trading at $120 per share, with strike price $135 and collect $5 premium, what happens on option expiration date? Choose the INCORRECT option.

  • Option will be profitable if stock price is $145 at expiration
  • Option will be profitable if stock price is $135 at expiration
  • Option will be profitable if stock price is $125 at expiration
  • Option will be profitable if stock price is $138 at expiration

13. What is the breakeven price (or breakeven point) of a call option?

  • Stock Price + Premium of Call Option
  • Strike Price + Premium of Call Option
  • Strike Price – Premium of Call Option
  • Strike Price

14. When do we buy a put option?

  • When we expect the stock price to go up
  • When we expect the stock price to go down
  • When we expect the stock price to trade sideways

15. What is the relationship between Option Premium and Time Remaining on Contract?

  • For call option, premium increases with more days to expiration on contract. For put option, premium is not impacted by days to expiration on contract.
  • For both call and put options, premium increases with more days to expiration on contract.
  • For put option, premium decreases with more days to expiration in contract. For call option, premium increases with more days to expiration in contract.
  • Time remaining on contract (Days to expiration) does not impact premium.

OPTIONS TRADING QUIZ QUESTIONS IN PICS

SOLUTIONS TO OPTIONS TRADING QUIZ

Do not use the solutions before you attempt the quiz. These solutions to options trading quiz are provided for reference only, after you have fairly attempted all questions.

1. What is a benefit of selling a put option?

Earn premium on cash

2. Which of the following have intrinsic value?

Call options with strike price less than the stock (share) price

3. What is the advantage of the Options Wheeling Strategy?

Can collect premiums on a regular basis

4. An option chain has the same:

Underlying Stock and Expiration Date

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5. What is one main benefit of stock options?

Leverage

6. In American Style options, you can exercise option ONLY on the last trading day before expiration. (T/F))

FALSE

7. Option’s Implied Volatility can be used to determine an expected price range of a stock with what probability?

68%

8. When do we buy a Call Option?

When we expect the stock price to go up

9. What is the breakeven price of a put option, on a share trading at $99, with strike price $95 that costs (premium) $3 per share?

$92

10. Which of these trades is ‘bullish’ in nature?

Selling a cash-secured put option

11. What is true about potential profits on stock options?

In call option, the potential profit is unlimited. In put option, the potential profit is limited.

12. If you write a covered call option, on a stock trading at $120 per share, with strike price $135 and collect $5 premium, what happens on option expiration date? Choose the INCORRECT option.

Option will be profitable if stock price is $145 at expiration

13. What is the breakeven price (or breakeven point) of a call option?

Strike Price + Premium of Call Option

14. When do we buy a put option?

When we expect the stock price to go down

15. What is the relationship between Option Premium and Time Remaining on Contract?

For both call and put options, premium increases with more days to expiration on contract.

OPTIONS TRADING QUIZ COVER

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