Q1

Q1 The number of breakeven points in a short straddle is/are ____.
[ 2 Marks ]
(a) 4
(b) 1
(c) 2
(d) 0
(e) I am not attempting the question

Q2 The current stock price of XYZ Ltd. is Rs. 30. At an exercise price of Rs. 30, put option on XYZ is priced
at Rs. 2.15 each and the call options are priced at Rs. 2.89 each. Each contract consists of 100 options.
What is the maximum profit if you buy a call? [ 2 Marks ]
(a) Rs. 3289
(b) Unlimited
(c) Rs. 2711
(d) Rs. 3000

Q3 The intrinsic value of a put option is the maximum of _____. [ 2 Marks ]
(a) (Spot Price - Strike Price), and zero
(b) (Strike Price - Spot Price), and zero
(c) (Strike Price - Spot Price - Premium), and zero
(d) (Spot Price - Strike Price - Premium), and zero

Q4 An investor Mr. B, sells 2 ATM Call Options, Buys 1 ITM call option and buys 1 OTM call option. The
strategy is a ___ strategy. [ 2 Marks ]
(a) Bear spread
(b) Short Condor

(c) Long Call Butterfly
(d) Bull spread

Q5 There is a put option on a stock with a strike price of Rs. 35 trading at Rs. 2. What would be the price of
the put option with a strike price of Rs. 34? [ 1 Mark ]
(a) Less than Rs. 2
(b) Rs. 3
(c) Re. 1
(d) Rs. 2

Q6 The profitable area of the pay off profile in a Long Call Condor is wider than that of the ______. [2
Marks ]
(a) Long Call
(b) Long Put
(c) Long Call Butterfly
(d) Long Strangle

Q7 The lower breakeven point in a long straddle _____. [ 2 Marks ]
(a) Strike Price of Long Call - Net Premium Paid on put
(b) Strike Price of Long Call - Net Premium Paid on call
(c) Strike Price of Long Call + Net Premium Paid
(d) Strike Price of Long Call - Net Premium Paid

Q8 Compared to a long strangle the chances of loss in Long straddle are- [ 1 Mark ]
(a) more
(b) less
(c) they are equal
(d) None of the above

Q9 Given that at strike price = Rs. 50 Put Premium = Rs. 5, Call Premium = Rs. 2. If an investor is using a
Long Straddle Strategy, then his initial outflow would be- [ 1 Mark ]
(a) Rs. 2
(b) Rs. 5
(c) Rs. 7
(d) Rs. 4

Q10 Which of the following is false with regard to Long call butterfly spread position? [ 2 Marks ]
(a) The seller expects the market to move significantly in either direction
(b) The profit for the buyer would be the maximum when the market price is equal to the highest
strike price
(c) It is combination of vertical bullish and vertical bearish strategies
(d) The buyer expects the market to be more or less stable

Q11 Nifty is a 4600. To do a Short Strangle Mr. A should select which strike prices? [ 1 Mark ]
(a) Rs. 4550 Put and Rs. 4450 Put
(b) Rs. 4550 Call and Rs. 4450 Call

(c) Rs. 4450 Call and Rs. 4550 Put
(d) Rs. 4700 Call and Rs. 4500 Put

Q12 Mr. C sells 1 ITM Call Option (lower strike), buys 1 ITM Call Option (lower middle), buys 1 OTM Call
Option (higher middle), sells 1 OTM Call Option (higher strike). He has entered into a _____ strategy. [
2 Marks ]
(a) short call condor
(b) long butterfly
(c) short strangle
(d) short butterfly

Q13 Suppose ABC Ltd. is trading at Rs. 4368 in June. An investor buys a Rs. 4200 call for Rs. 98 while
shorting ABC Ltd.. The breakeven point is ____. [ 2 Marks ]
(a) Rs. 4270
(b) Rs. 4298
(c) Rs. 4466
(d) Rs. 4102

Q14 An investor Mr. X expects the price of a stock ABC Ltd. to increase. He Buys a Call and Sells a Put. The
strategy he has done is called as ____. [ 2 Marks ]
(a) Long Combo
(b) Short Straddle
(c) Bear Put Spread
(d) Long Straddle

Q15 When you are bullish about a stock you can do a _____. [ 2 Marks ]
(a) Bear Put Spread
(b) Buy Put
(c) Sell Call
(d) Long Combo

Q16 In a Synthetic Long Call strategy the investor is ___. [ 2 Marks ]
(a) neutral to bearish
(b) conservatively bullish
(c) bearish
(d) conservatively bearish

Q17 Nifty is at 3200. Mr. XYZ sells 2 ATM Nifty Call Options with a strike price of Rs. 3200 at a premium of
Rs. 98 each, buys 1 ITM Nifty Call Option with a strike price of Rs. 3100 at a premium of Rs. 141.55 and
buys 1 OTM Nifty Call Option with a strike price of Rs. 3300 at a premium of Rs. 64. The Net debit is
_____. [ 1 Mark ]
(a) Rs. 9.55
(b) Rs. 11.75
(c) Rs. 9.75
(d) Rs. 10.75

Q18 The profit in a covered call strategy is _____. [ 3 Marks ]
(a) limited
(b) always more than in long stock position
(c) no risk
(d) unlimited

Q19 In a Short Call Butterfly there should be _____ distance between each strike. [ 2 Marks ]
(a) unequal
(b) equal
(c) any
(d) zero

Q20 Mr. XYZ is bullish on Nifty when it is at 4191.10. He sells a Put option with a strike price Rs. 4100 at a
premium of Rs. 170.50 expiring on 31st July. If Nifty closes at 3400 at expiry Mr. XYZ's profit / loss will
be ___. [ 1 Mark ]
(a) loss of Rs. 170.50
(b) loss of Rs. 529.50
(c) gain of Rs. 170.50
(d) gain of Rs. 529.50

Q21 Mr. XYZ sells a Nifty Put option with a strike price of Rs. 4000 at a premium of Rs. 21.45 and buys a
further OTM Nifty Put option with a strike price Rs. 3800 at a premium of Rs. 3.00 when the current Nifty
is at 4191.10, with both options expiring on 31st July. If on expiry the Nifty closes at 3600, what is the
net pay-off for Mr. XYZ? [ 1 Mark ]
(a) gain of Rs. 18.45
(b) loss of Rs. 18.45
(c) loss of Rs. 181.55

(d) gain of Rs. 181.55

Q22 A _____________ is created by going short on both put and call options, and the strike price and time to
expiration of both the options are same. [ 1 Mark ]
(a) Synthetic put
(b) long Strangle
(c) Short straddle
(d) Long straddle

Q23 The net effect of this strategy is to bring down the cost and raise the breakeven on buying a Put (Long
Put). [ 2 Marks ]
(a) Long Condor
(b) Bear Put Spread
(c) Bull Put Spread
(d) Short Condor

Q24 Mr. A buys a call with strike price of Rs.100 for Rs. 3 and sells a call with strike price of Rs. 90 for the
same month for Rs. 6. The maximum possible loss in the strategy is __. [ 2 Marks ]
(a) Rs. 9
(b) Rs. 7
(c) Rs. 8
(d) Rs. 10

Q25 A moderately bearish investor will enter into a ______ strategy. [ 2 Marks ]
(a) Buy Call
(b) Covered Put
(c) Long Straddle
(d) Sell Put

Q26 In a Bull Call Spread if the stock price rises to the higher (sold) strike, the investor makes the ____.
[ 2 Marks ]
(a) maximum loss
(b) maximum loss which is equal to the strike price
(c) maximum profit which is equal to the strike price
(d) maximum profit

Q27 Mr. XYZ sells a Nifty ITM call option with strike price of Rs. 2600 at a premium of Rs. 154 and buys a
Nifty OTM call option with strike price Rs. 2800 at a premium of Rs. 49. If on expiry the Nifty closes at
3200, the net pay-off for Mr. XYZ is ___? [ 1 Mark ]
(a) loss of Rs. 95
(b) profit of Rs. 105
(c) profit of Rs. 95
(d) loss of Rs. 105

Q28 A stock ABC Ltd. is trading at Rs. 450. Mr. XYZ is bullish on the stock. He sells a Put option with a strike
price Rs. 400 at a premium of Rs. 1.00 and buys a Call Option with a strike price of Rs. 500 at a premium
of Rs. 2. If the stock closes at Rs. 600, his net payoff is ___. [ 1 Mark ]
(a) Rs. 299
(b) Rs. 99
(c) Rs. 199
(d) Rs. 399

Q29 A Short Call Condor is suitable for ____ markets. [ 2 Marks ]
(a) bullish only markets
(b) highly volatile markets
(c) low volatility markets
(d) bearish only markets

Q30 Mr. X buys a put with strike price of Rs. 114 for Rs. 7 and sells a put with strike price of Rs. 110 for the
same month for Rs. 5. If at expiry, stock closes at 100, what is profit/loss for the strategy? [ 2 Marks ]
(a) Rs. -2 (loss)
(b) Rs. 2 (profit)
(c) Rs. 5 (profit)
(d) Rs. -5 (loss)

Q31 Bull call spreads can be implemented by buying an _____________ option , while simultaneously writing
a higher strike _______________ option of the same underlying security and the same expiration
month. [ 2 Marks ]
(a) out- of the money, at the money
(b) in-the money, out-of-the money
(c) out- of the money, out-of the money
(d) out-of the money, in- the money

Q32 Nifty is presently at 2694. Mr. XYZ buys one Nifty ITM Put with a strike price Rs. 2800 at a premium of
Rs. 132 and sells one Nifty OTM Put with strike price Rs. 2600 at a premium Rs. 52. If on expiry of the
options the Nifty closes at 2200, then the net pay-off for Mr. XYZ is ___. [ 1 Mark ]
(a) 0
(b) Rs. 80
(c) Rs. 20
(d) Rs. 120

Q33 Nifty is at 3200. Mr. XYZ buys 2 ATM Nifty Call Options with a strike price of Rs. 3200 at a premium of
Rs. 97.90 each, sells 1 ITM Nifty Call Option with a strike price of Rs. 3100 at a premium of Rs. 141.55
and sells 1 OTM Nifty Call Option with a strike price of Rs. 3300 at a premium of Rs. 64. On expiry of the
options Nifty closes at 3600. The net payoff for Mr. XYZ is ____. [ 1 Mark ]
(a) Rs. 29.75
(b) Rs. 9.75
(c) Rs. 19.75
(d) Rs. 10.75

Q34 Suppose ABC Ltd. is trading at Rs. 4500 in June. An investor, Mr. A, shorts Rs. 4300 Put by selling a July
Put for Rs. 24 while shorting an ABC Ltd. stock at Rs. 4500. If ABC Ltd. closes at Rs. 4400 on expiry of
the options, the net payoff for Mr. A is ____. [ 1 Mark ]
(a) Rs. 124
(b) Rs. 244
(c) Rs. 224
(d) Rs. 234

Q35 Covered Call payoff diagram has same shape as payoff diagram of a _____. [ 2 Marks ]
(a) Long put
(b) Protective put
(c) Short Call
(d) Short put

Q36 The seller of a call option does not expect: [ 2 Marks ]
(a) Bearishness in the markets
(b) Downside volatility in the price of the underlying asset
(c) Decrease in the price of underlying asset
(d) Increase in the price of the underlying asset

Q37 Suppose an investor Mr. A buys ABC Ltd. for Rs. 4758. He writes a Call of strike price Rs. 5000 for Rs. 39
while simultaneously purchasing a Rs. 4700 strike price Put for Rs. 27. At expiry of the options the stock
closes at Rs. 5100. The Net payoff for Mr. A is ___. [ 1 Mark ]
(a) + Rs. 265
(b) + Rs. 235
(c) + Rs. 250
(d) + Rs. 254

Q38 Suppose Nifty is at 4351 in May. An investor executes a long strangle by buying a June Rs. 4300 put for
Rs. 123 and a June Rs. 5850 call for Rs. 85. The net debit taken to enter the trade is ____. [ 2 Marks ]
(a) Rs. 208
(b) Rs. 85
(c) Rs. 38
(d) Rs. 123

Q39 A Long Straddle is a ____ strategy. [ 2 Marks ]
(a) volatile
(b) bullish
(c) bearish
(d) neither bullish nor bearish

Q40 Nifty is at 3600. Mr. XYZ sells 1 ITM Nifty Call Option with a strike price of Rs. 3400 at a premium of Rs.
41.25, buys 1 ITM Nifty Call Option with a strike price of Rs. 3500 at a premium of Rs. 26, buys 1 OTM
Nifty Call Option with a strike price of Rs. 3700 at a premium of Rs. 9.80 and sells 1 OTM Nifty Call
Option with a strike price of Rs. 3800 at a premium of Rs. 6.00. On expiry of the options if Nifty closes at
3100, the net pay-off for Mr. XYZ is ____. [ 1 Mark ]
(a) Rs. - 11.45 (loss)
(b) Rs. 88.55 (profit)
(c) Rs. -88.55 (loss)
(d) Rs. 11.45 (profit)

Q41 The losses in a synthetic long call are ____. [ 1 Mark ]
(a) limited
(b) depends on the strike price
(c) depends on the premium
(d) unlimited
Q42 An investor adopts a short straddle at a strike price of Rs. 49, premium for call being Rs. 2.30 and put
being Rs. 3.50. the maximum gain would be: [ 2 Marks ]
(a) Rs. 2.30
(b) Rs. 3.50
(c) Rs. 1.20
(d) Rs. 5.80

Q43 Mr. M buys 1 ITM Call (lower strike), sells 1 ITM Call (lower middle), sells 1 OTM Call (higher middle) and
buys 1 OTM Call (higher strike). He has entered into a _____ strategy. [ 2 Marks ]
(a) long strangle
(b) long call Condor
(c) long butterfly
(d) short butterfly

Q44 A Short Strangle is a slight modification to the _____. [ 2 Marks ]
(a) A Long Strangle
(b) A Long Condor
(c) A Long Butterfly spread
(d) Short Straddle

Q45 What is the reason for investors to opt for a long strangle strategy instead of a long straddle strategy?
[ 2 Marks ]
(a) its safer

(b) it gives a higher return
(c) the premium paid is lower
(d) the premium received is higher

Q46 Suppose ABC Ltd. is trading at Rs. 4457 in June. An investor Mr. A buys a Rs. 4500 call for Rs. 100 while
shorting the stock at Rs. 4457. If ABC Ltd. closes at Rs. 4100 on expiry of the options contract, the net
payoff for the investor is Rs. _____. [ 1 Mark ]
(a) Rs. 357
(b) Rs. 557
(c) Rs. 457
(d) Rs. 257

Q47 The profit in a collar strategy is ____. [ 2 Marks ]
(a) limited
(b) unlimited
(c) limited to premium received on the call
(d) limited to premium received on the put

Q48 Nifty is at 3600. Mr. XYZ buys 1 ITM Nifty Call Option with a strike price of Rs. 3400 at a premium of Rs.
41.25, sells 1 ITM Nifty Call Option with a strike price of Rs. 3500 at a premium of Rs. 26, sells 1 OTM
Nifty Call Option with a strike price of Rs. 3700 at a premium of Rs. 9.80 and buys 1 OTM Nifty Call
Option with a strike price of Rs. 3800 at a premium of Rs. 6.00. On expiry of the options if Nifty closes at
3200, the net pay-off for Mr. XYZ is ____. [ 1 Mark ]
(a) Rs. -88.55 (loss)
(b) Rs. -11.45 (loss)

(c) Rs. 11.45 (profit)
(d) Rs. 88.55 (profit)

Q49 Which strategy involves writing a call and put option at different strike price but same maturity ____. [
2 Marks ]
(a) short straddle
(b) long straddle
(c) long strangle
(d) short strangle

Q50 Mr. X buys a put with strike price of Rs. 100 for Rs. 5 and sells a put with strike price of Rs. 108 for the
same month for Rs. 10. The maximum possible gain in the strategy is ___. [ 2 Marks ]
(a) Rs. 7
(b) Rs. 8
(c) Rs. 5
(d) Rs. 6

Q51 Mr. XYZ buys 2 ATM call options, sells 1 ITM call option and sells 1 OTM call option. He has entered into a
_____ strategy. [ 2 Marks ]
(a) Short straddle
(b) Long Call Butterfly
(c) Short Strangle
(d) Short Call Butterfly

Q52 Which of the following options strategy is not a bullish strategy? [ 1 Mark ]
(a) Buying a Futures contract on the Stock
(b) Buying a call option
(c) Writing a put option
(d) Writing a call option

Q53 An investor sells a stock and sells a put on the stock. He has done a _____. [ 2 Marks ]
(a) Long Strangle
(b) Short Straddle
(c) Long Straddle
(d) Covered Put

Q54 Mr. A buys a call with strike price of Rs. 99 for Rs. 6 and sells a call with strike price of Rs. 105 for the
same month for Rs. 3. If at expiry,stock closes at 105, what is the profit/loss for the strategy? [ 1 Mark
]
(a) Rs. -3 (loss)
(b) Rs. -6 (loss)
(c) Rs. 3 (profit)
(d) Rs. 6 (profit)

Q55 In case of Bull Put Spread Maximum Profit is achieved when ____. [ 2 Marks ]
(a) Price of Underlying < Strike Price of Short Put

(b) Price of Underlying <= Strike Price of Short Put
(c) Price of Underlying > Strike Price of Short Put
(d) Price of Underlying >= Strike Price of Short Put

Q56 Mr. D Buys a Stock, Buys a Put and Sells a Call on the stock. This strategy is ____. [ 2 Marks ]
(a) a long straddle
(b) a long butterfly
(c) a long strangle
(d) a collar

Q57 Suppose a June call option on a stock X is currently trading at Rs. 31 with a strike price Rs. 35. On the
expiration date the price of the stock is Rs. 32. Then, which of the following is correct ? [ 1 Mark ]
(a) Option is in-the-money
(b) Pay off is Rs. 3
(c) Option is out -of- money
(d) Option is at-the-money

Q58 Mr. XYZ shorts a stock PQR Ltd. and buys Call options on PQR Ltd. for an equal amount. He has created a
_______ strategy. [ 2 Marks ]
(a) Long Straddle
(b) Protective Call
(c) Long strangle
(d) Short Straddle

Q59 Mr. Ramesh is adopting a Bear Call spread strategy using call options on a stock having the strike prices
of Rs. 150 and Rs.125, priced at Rs. 7 and Rs. 20 respectively. At what price of the stock during the
expiration, would he break even ? [ 2 Marks ]
(a) Rs. 137
(b) Rs. 130
(c) Rs. 132
(d) Rs. 138

Q60 Which of the following statements about a covered call writing strategy is true? [ 2 Marks ]
(a) Rewards are unlimited
(b) Break even is Stock Price paid + Premium received
(c) It is a bearish strategy
(d) Rewards are limited

Q1

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Q1 The number of breakeven points in a short straddle is/are ____.

(e) I am not attempting the question

(a) Rs. 3289

(c) Rs. 2711

(d) Rs. 3000

(e) I am not attempting the question

(a) (Spot Price - Strike Price), and zero

(b) (Strike Price - Spot Price), and zero

(c) (Strike Price - Spot Price - Premium), and zero

(d) (Spot Price - Strike Price - Premium), and zero

(e) I am not attempting the question

(a) Bear spread

(b) Short Condor

(d) Bull spread

(e) I am not attempting the question

(a) Less than Rs. 2

(e) I am not attempting the question

(a) Long Call

(b) Long Put

(c) Long Call Butterfly

(d) Long Strangle

(e) I am not attempting the question

(a) Strike Price of Long Call - Net Premium Paid on put

(b) Strike Price of Long Call - Net Premium Paid on call

(c) Strike Price of Long Call + Net Premium Paid

(d) Strike Price of Long Call - Net Premium Paid

(e) I am not attempting the question

(c) they are equal

(d) None of the above

(e) I am not attempting the question

(e) I am not attempting the question

(c) It is combination of vertical bullish and vertical bearish strategies

(d) The buyer expects the market to be more or less stable

(e) I am not attempting the question

(a) Rs. 4550 Put and Rs. 4450 Put

(b) Rs. 4550 Call and Rs. 4450 Call

(d) Rs. 4700 Call and Rs. 4500 Put

(e) I am not attempting the question

(a) short call condor

(b) long butterfly

(c) short strangle

(d) short butterfly

(e) I am not attempting the question

(a) Rs. 4270

(b) Rs. 4298

(c) Rs. 4466

(d) Rs. 4102

(e) I am not attempting the question

(a) Long Combo

(b) Short Straddle

(c) Bear Put Spread

(d) Long Straddle

(a) Bear Put Spread

(b) Buy Put

(c) Sell Call

(d) Long Combo

(e) I am not attempting the question

(a) neutral to bearish

(b) conservatively bullish

(d) conservatively bearish

(e) I am not attempting the question

(a) Rs. 9.55

(b) Rs. 11.75