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Intermediate Level Review

Question 1:

A bear call spread will result in what type of cash flow to the trading account?

  • a) a debit
  • b) a credit
  • c) a debit or a credit, depending on the margin rate
  • d) a debit or a credit, depending on expected market volatility
  • CLICK FOR ANSWER

Question 2:

A calendar spread is:

  • a) bullish
  • b) bearish
  • c) neutral
  • d) bullish, bearish, or neutral, depending on the strike price and option type
  • CLICK FOR ANSWER

Question 3:

A long straddle will typically show a profit:

  • a) when the market moves significantly in either direction
  • b) only when the market moves significantly higher
  • c) when the market settles on the strike price on option expiration day
  • d) when market volatility decreases
  • CLICK FOR ANSWER

Question 4:

When using a stop order and the stop price is triggered:

  • a) all existing positions are hedged
  • b) all existing positions are liquidated
  • c) a market order is executed
  • d) a market order may or may not be executed, depending on current market prices
  • CLICK FOR ANSWER
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Level Review

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