Ch.16: Introduction to Options

An option contract gives the holder:

Regarding rights and obligations, who bears the obligation in an option contract?

An option that gives the buyer the right to buy the underlying asset is called a:

Index option contracts on NSE and BSE are available for trading with which range of maturities?

Under SEBI's October 2024 circular effective November 20, 2024, an exchange offering weekly index derivatives is limited to:

Stock option contracts on the NSE follow which trading cycle?

Which statement correctly distinguishes the payoff symmetry of futures versus options?

Regarding margin obligations, which statement correctly distinguishes futures from options?

Regarding daily mark-to-market (MTM), how do futures and options differ?

Implied volatility of an option is:

When implied volatility is high (e.g., ahead of an event with binary/uncertain outcomes), option traders typically:

The intrinsic value of an option can never be:

A stock is at Rs.286. A call option with a strike of Rs.260 is quoted at Rs.45. The intrinsic value of this call is:

Which types of options have zero intrinsic value?

Leverage in the context of options refers to:

An out-of-the-money (OTM) call option is one where:

An at-the-money (ATM) option is best defined, in practice, as the option whose:

A call option is said to be in-the-money (ITM) when:

Delta measures:

If a call option has a delta of 0.60, a Rs.1 rise in the underlying's price will cause the option premium to change by approximately:

A call option has a delta of 0.50 and a gamma of 0.08. If the underlying rises by Rs.1, the new delta becomes approximately:

Theta measures an option's sensitivity to:

Vega and Rho respectively measure an option's sensitivity to:

How does volatility affect call and put option premiums?

Higher interest rates generally have what effect on call and put option values?

Which of the following is NOT one of the five fundamental parameters that determine an option's price?

When the price of the underlying asset rises, what happens to call and put option premiums (all else constant)?

'Time decay' in options refers to:

Per the workbook, the Black & Scholes model, published in 1973 by Fischer Black and Myron Scholes, is characterized by:

An American option, as distinguished from a European option, allows the holder to exercise the right:

In India, exchange-traded index and stock options are:

Assignment of options refers to:

For a long call with strike Rs.17,500 and premium Rs.95, the Break-Even Point (BEP) is calculated as:

For a long call option buyer, why is no margin payable to the exchange?

A trader buys a call at strike 17,500 for a premium of Rs.95 (lot size 50). If the index closes at 18,000 on expiry, the net profit is:

For the same long put (strike 17,500, premium Rs.150, lot size 50), what is the theoretical maximum profit, and when does it occur?

A trader buys a put at strike 17,500 for premium Rs.150. The Break-Even Point (BEP) for this position is:

For a short call position at strike 17,500 with premium Rs.95 received, what happens to gains and losses as the index rises above the strike?

Why must an option seller/writer pay margin to the exchange, unlike an option buyer?

A long option position (buyer) has which risk-return profile?

Between a deep-ITM and a deep-OTM option of the same underlying and expiry, which generally offers a higher potential Return on Investment (ROI) if the market moves favourably, and why?

With the index at 17,562, a call at strike 17,300 costs Rs.327 premium. If the index rises to 17,800 at expiry, the buyer's profit and ROI are approximately:

'A European call option gives the buyer the right but not the obligation to buy from the seller an underlying at the prevailing market price "on or before" the expiry date.' Is this statement true or false?

The buyer of an option cannot lose more than the option premium paid. Is this true for European options, American options, both, or neither?

An in-the-money option is:

You sold a put option on a share, strike Rs.245, and received a premium of Rs.49. What is the theoretical maximum loss on this position?

A seller of a put option is said to have which market outlook, per the workbook?

Per the workbook's analysis, why is selling deep in-the-money (ITM) put options considered riskier than selling deep out-of-the-money (OTM) puts, despite the higher premium collected?