Course #101:Basic Investing

1) If you buy an option, do you have rights or obligations?

2) If you sell an option, do you have rights or obligations?

3) You are long 3 Microsoft August $30 calls. What does this position allow you to do?

4) What is the last options trading day for November 2004 options?

5) You are long 7 Intel June $25 puts. What does this position allow you to do?

6) Which entity guarantees the performance of delivery if you should exercise an option?

7) You see a $75 call listed in the newspaper. What two names does the $75 figure go by?

8) A call option is trading for $6.50. What is the technical term for this $6.50 price?

9) You decide to buy 4 $30 calls at $2 each. What will be the total cost of the trade not counting commissions?

10) Assuming they represent the same underlying stock, which call option is more expensive, the August $75 call or the August $80 call?

11) Assuming they represent the same underlying stock, which option is more expensive, the July $75 call or the September $75 call?

12) Long call option holders have the right to:

13) The underlying stock is trading for $100. Which option is in-the-money?

14) The underlying stock is trading for $75. Which option is in-the-money?

15) The underlying stock is trading for $50 and the $45 call is trading for $6. What are the intrinsic and time values?

16) At expiration, all options are worth one of two values. What are they?

17) If you wish to close your long call option prior to expiration, you should:

18) What is the one factor that really gives options their value?

19) You find a $50 call with the stock trading for $57. What is the minimum the $50 call should be worth?

20) You find a $100 put with the stock trading for $94. What is the minimum the $100 put should be worth?

21) You wish to buy 2,000 shares of Microsoft but do not have the money. How could you control 2,000 shares for less money?

22) You own 300 shares of Merck, which is trading for $45. They are due to release an earnings report in two weeks and you're concerned that the stock may fall. How can you protect your shares?

23) You are short 500 shares of Intel at $25. How can you protect yourself from the upside risk above $30?

24) You own 200 shares of stock at $40. If you sell two $45 call options, what is this position called? What right or obligation do you have?

25) When you trade options: