Options Education

Beginner Level: Review

Question 1:

True or False: A call option gives the holder (buyer) the right but not the obligation to BUY the currency at the strike price

TRUE

Question 2:

True or False: A put options gives the holder (buyer) the right but not the obligation to BUY the currency anywhere above the strike price

FALSE – it gives the holder (buyer) the right but not the obligation to SELL the currency at the strike price only.

Question 3:

If an option is in the money, then what is true:

  1. If the option is exercised, there is no cash settlement value
  2. if the option is exercised, there is only time value available to the trader
  3. if the option is exercised, there is only intrinsic value available to the trader
  4. if the option is exercised, there is only volatility value available to the trader

C is the correct answer.

Question 4:

if an option is a call option, then it may increase in value if

  1. the market price for the spot goes down
  2. the market price for the spot goes up
  3. the market price for the spot stays the same
  4. the market price for the spot goes away

B is the correct answer.