Options Trading, Finance And Accounting

Question: Why is it important to manage risk when trading stock options?
A
Because it is a good general policy

B
Because it guarantees no losses

C
Because it is required by tax law

D
Because of the risky nature of stock options

Note: Answer not sure
1. Report
Question: What would an investor with a large risk tolerance level most likely do?
A
Sell options of a security of which they do not own the underlying stock

B
Buy both call and put options which help reduce the overall risk

C
Sell call options on a security of which they own the underlying stock

D
Do nothing and invest in foreign exchange

Note: Answer not sure
1. Report
Question: What does the Monte Carlo method of pricing options attempt to do?
A
Give the options trader a specific guideline on what to buy

B
Tell an options trader what market to trade in

C
Tell the options trader if he should sell puts

D
Calculate a price based on weighting potential outcomes

Note: Answer not sure
1. Report
Question: What is the offset to limiting downside?
A
Unlimited profits

B
Often limited profits

C
No profits

D
Risky tax implications

Note: Answer not sure
1. Report
Question: What does heavy volume trading indicate?
A
That the expiration date is near

B
That the current market price is wrong

C
That insiders know something no one else does

D
Typically that news has come out regarding the underlying stock

Note: Answer not sure
1. Report
Question: Which of the following would technical analysis include?
A
Company financials

B
Market statistics

C
Stock pricing

D
Currency

Note: Answer not sure
1. Report
Question: What would be the objective of a conservative trader's portfolio?
A
Short selling stocks

B
Long term returns over time

C
Risky trading

D
Short term returns

Note: Answer not sure
1. Report
Question: Which of the following would be a good example of risk mitigation?
A
Purchasing only small cap stocks

B
Purchasing stock options in three industries

C
Purchasing stock options all in one industry

D
Purchasing only options on blue chip stocks

Note: Answer not sure
1. Report
Question: What should an options investor do if a call option they own is out of the money and nearing expiration?
A
Sell the option

B
Buy offsetting put option

C
Buy more of the option

D
Depends on their tolerance level for risk and their strategy

Note: Answer not sure
1. Report
Question: What would an investor who is employing the straddle technique hope to happen?
A
That the price will move in a tight range, not varying much

B
That they can sell the underlying stock for more than the option makes

C
That the option will expire without selling

D
That the price will move drastically in one direction, up or down

Note: Answer not sure
1. Report

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Question: Why is it important to manage risk when trading stock options?

Question: What would an investor with a large risk tolerance level most likely do?

Question: What does the Monte Carlo method of pricing options attempt to do?

Question: What is the offset to limiting downside?

Question: What does heavy volume trading indicate?

Question: Which of the following would technical analysis include?

Question: What would be the objective of a conservative trader's portfolio?

Question: Which of the following would be a good example of risk mitigation?

Question: What should an options investor do if a call option they own is out of the money and nearing expiration?

Question: What would an investor who is employing the straddle technique hope to happen?