Question No.

What is maximum profit in Long Call butterfly strategy ?

Difference between adjacent strikes minus bet debit
Net debit paid
Strike Price of Higher Strike Long Call � Net Premium Paid
Strike Price of Lower Strike Long Call + Net Premium Paid
Question No. 2

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 �
Rs. 2
Rs. 5
Rs. 7
Rs. 4
Question No. 3

Suppose Nifty is at 4500 in May. An investor, Mr. A, execute a short strangle by selling a Rs. 4300
Nifty Put for a premium of Rs. 23 and a Rs. 4700 Nifty call for Rs. 43. What will be Mr. A net payoff
on expiry if Nifty closes at 4234 ?
-43
43
66
0
Question No. 4

What is the reason for investors to opt for a long strangle instead of a long straddle strategy ?
It’s safer
It gives a higher return
The premium paid is lower
The premium received is higher
Question No. 5

Suppose Nifty is at 4500 in May. An investor, Mr. A, executes a long strangle by buying a Rs. 4300
Nifty put for a premium of Rs. 23 and a Rs. 4700 Nifty Call for Rs. 43. What is the maximum loss
that Mr. A has to bear ?
Rs. 200
Rs. 43
Rs. 23
Rs. 66
Question No. 6

In case of Bull Put Spread Maximum Profit is achieved when ____.

Price of Underlying < Strike Price of Short Put
Price of Underlying <= Strike Price of Short Put
Price of Underlying > Strike Price of Short Put
Price of Underlying >= Strike Price of Short Put
Question No. 7

Suppose Nifty is at 4500 in May. An investor, Mr. A, execute a short strangle by selling a Rs. 4300
Nifty Put for a premium of Rs. 23 and a Rs. 4700 Nifty call for Rs. 43. What is breakeven for Mr. A ?
4500, 4300
4766, 4234
4500, 4234
4766, 4300
Question No. 8

What is the breakeven point for an investor following synthetic call strategy ?
Strike price + Put Premium
Stock price + Put Premium
Strike Price Put Premium
Stock price Put Premium
Question No. 9

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 :
Rs. 2.30
Rs. 3.50
Rs. 1.20
Rs. 5.80
Question No. 10

Suppose Nifty is at 4500 in May. An investor, Mr. A, execute a short strangle by selling a Rs. 4300
Nifty Put for a premium of Rs. 23 and a Rs. 4700 Nifty call for Rs. 43. What will be Mr. A net payoff
on expiry if Nifty closes at 4000 ?
-277
+43
-134
0
Question No. 11

In short straddle an investor sells a call and put on the same stock / index for the same maturity but
different strike price.
TRUE
FALSE
None of the above
Both
Question No. 12

Long Call butterfly strategy is used in .market.

Bullish
Bearish
Netural and bearish on volatility
Volatile
Question No. 13

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters a long straddle by buying a May
Rs. 4500 Nifty put for Rs. 85 and a May Rs. 4500 Nifty call for Rs. 122. What will be the net payoff
for Mr. A, if Nifty closes at 4100 ?
315
-122
193
0
Question No. 14

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. What is the breakeven point in a covered put
strategy?
Sale price of Stock - Strike price + Put premium
Sale price of Stock Strike price Put premium
Sale price of Stock + Put premium
Sale price of Stock Put premium
Question No. 15

In Long Call Butterfly strategy the distance between the strike price of call should be ����
Equal
Small
Large
Data insufficient
Question No. 16

What is the maximum risk in short strangle ?

Unlimited
Limited to premium received
Strike price of short call + Net premium received
Strike price of short call Net premium received
Question No. 17

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. What is the breakeven point in a covered put
strategy? what is the maximum risk for Mr. XYZ ?
Unlimited
Rs. 224
Rs. 4524
Rs. 4324
Question No. 18

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A, sells a May Rs. 4500 Nifty Put for Rs. 85
and a May Rs. 4500 Nifty Call for Rs. 122. The net credit received is Rs. 207, Which is also his
maximum possible profit. Mr. A has entered in to ���.strategy.
Covered Put
Long Straddle
 Short straddle
Long strangle
Question No. 19

A stock ABC Ltd is trading at Rs. 450 Mr. XYZ is bullish on the stock, but does not want to invest
Rs. 450. He does a long combo. He sells a put option with a strike price Rs. 400 at a premium of
Rs. 1 and buys a call option with a strike price or Rs. 500 at a premium of Rs. 2. What is the net
outflow for Mr. XYZ ?
Rs. 450
Rs. 2
Rs. 1
Rs. 400
Question No. 20

The price specified in the options contract is known as the or the .I-Strike Price,II-Exercise Price,III-
Market Price,IV-Future Price
I&II
III&IV
II&III
I&IV
Question No. 21

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. What is the breakeven point in a covered put
strategy? What will be the net payoff for Mr. XYZ if ABC Ltd. Closes at 4600 ?
24
0
76
-76
Question No. 22

The intrinsic value of a put option is the maximum of ����

(Spot Price � Strike Price), and zero
(Strike Price �Spot Price), and zero
(Strike Price � Spot Price � Premium), and zero
(Spot Price � Strike Price � Premium ) and zero
Question No. 23

Suppose an investor Mr. A buys or is holding ABC Ltd. Currently trading at Rs. 4758. He decided to
write a call of strike price Rs. 5000 for Rs. 39 while simultaneously purchase a Rs. 4700 strike price
put for Rs. 27. Mr. A has entered into ����.Strategy ? What is the breakeven for Mr. A ?
4758
4746
4739
5127
Question No. 24

.strategy is used when investor is conservatively bullish.

 Long Call
Long Put
Straddle
Collar
Question No. 25

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters a long straddle by buying a May
Rs. 4500 Nifty put for Rs. 85 and a May Rs. 4500 Nifty call for Rs. 122. What is net debit in this
case ?
37
207
5365
7378
Question No. 26

The lower breakeven point in a long straddle

Strike Price of Long Call Net Premium Paid on Put
Strike Price of Long Call Net Premium paid on Call
Strike Price of Long Call + Net Premium Paid
Strike Price of Long Call Net Premium Paid
Question No. 27

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters into Short Straddle by selling a
May Rs. 4500 Nifty Put for Rs, 85 and a May Rs. 4500 Nifty call for Rs. 122. What is the net credit
in this case ?
Rs. 4450
Rs. 4500
Rs. 122
Rs. 207
Question No. 28

In short straddle an investor sells a call and put on the same stock / index for the same maturity but
different strike price.
TRUE
FALSE
None of the above
Both
Question No. 29

A Strangle is slight modification to ������.

Long Put
Collar
Straddle
All of the above
Question No. 30

A long straddle is a strategy.

 Bearish
Bullish
Very little volatility
Volatility
Question No. 31

The losses in a synthetic long call are ____.

Rs. 2.30
depends on the strike price
depends on the premium
Rs. 5.80
Question No. 32

Suppose an investor Mr. A buys or is holding ABC Ltd. Currently trading at Rs. 4758. He decided to
write a call of strike price Rs. 5000 for Rs. 39 while simultaneously purchase a Rs. 4700 strike price
put for Rs. 27. Mr. A has entered into .Strategy ? what will be net payoff for Mr. A if ABC closes at
4400 ?
-46
-54
46
54
Question No. 33

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters a long straddle by buying a May
Rs. 4500 Nifty put for Rs. 85 and a May Rs. 4500 Nifty call for Rs. 122. What will be the net payoff
for Mr. A if Nifty closes at 5300 ?
678
593
-85
0
Question No. 34

Suppose Nifty is at 4500 in May. An investor, Mr. A, executes a long strangle by buying a Rs. 4300
Nifty put for a premium of Rs. 23 and a Rs. 4700 Nifty Call for Rs. 43. What is breakeven for Mr. A
4500, 4300
4766, 4234
4500, 4234
4766, 4300
Question No. 35

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters a long straddle by buying a May
Rs. 4500 Nifty put for Rs. 85 and a May Rs. 4500 Nifty call for Rs. 122. What is net debit in this
case ?
37
207
5365
7378
Question No. 36

..strategy is also called � buy right�.

Short Call
Long Call
Synthetic Call
Covered Call
Question No. 37

What is maximum profit in long straddle ?

Unlimited
Limited to premium paid
Limited to strike price � stock price
Limited to strike price + premium paid
Question No. 38

Suppose Nifty is at 4500 in May. An investor, Mr. A, executes a long strangle by buying a Rs. 4300
Nifty put for a premium of Rs. 23 and a Rs. 4700 Nifty Call for Rs. 43. What will be Mr. A net payoff
on expiry if Nifty closes at 4000 ?
277
-43
234
0
Question No. 39

Suppose Nifty is at 4500 in May. An investor, Mr. A, executes a long strangle by buying a Rs. 4300
Nifty put for a premium of Rs. 23 and a Rs. 4700 Nifty Call for Rs. 43. What will be Mr. A net payoff
on expiry if Nifty closes at 4234 ?
43
-43
-66
0
Question No. 40

Suppose an investor Mr. A buys or is holding ABC Ltd. Currently trading at Rs. 4758. He decided to
write a call of strike price Rs. 5000 for Rs. 39 while simultaneously purchase a Rs. 4700 strike price
put for Rs. 27. Mr. A has entered into .Strategy ? what is the net debit/credit for Mr. A at the time of
contract ?
4758 debit
4758 credit
4746 debit
4746 credit
Question No. 41

An investor is bullish on security when it is trading at Rs. 300. He buys a call of strike price 330 @
Rs. 4 and sell a put of strike price 270 @ Rs. 3. This strategy is called .
Covered Call
Synthetic Call
 Long Combo
Long straddle
Question No. 42

Suppose an Investor Mr. A buys or is holding ABC Ltd currently trading at Rs. 4758. He decides to
write a call of strike price Rs. 5000 for Rs. 39, while simultaneously purchase a Rs. 4700 strike price
put for Rs. 27. What is the net debit / credit for Mr. A at the time of contract ?
4758 debit
4758 credit
4746 debit
4746 credit
Question No. 43

Suppose Nifty is at 4450 on 27th April. An investor, Mr. A enters into Short Straddle by selling a
May Rs. 4500 Nifty Put for Rs, 85 and a May Rs. 4500 Nifty call for Rs. 122. What is the net credit
in this case ?
Rs. 4450
Rs. 4500
Rs. 122
Rs. 207
Question No. 44

Mr. ABC is bearish on stock of reliance capital ltd. On 20th July, 2012 reliance capital ltd is traded at
700 and he buys a call on strike price of 680. This call is called ..
In the money
Out of the money
At the money
Deep in the money
Question No. 45

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 ____.
Rs. - 11.45 (loss)
Rs. 88.55 (profit)
Rs. -88.55 (loss)
Rs. 11.45 (profit)
Question No. 46

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 ___.
+ Rs. 265
+ Rs. 235
+ Rs. 250
+ Rs. 254
Question No. 47

Suppose Nifty is at 4500 in May. An investor, Mr. A, executes a long strangle by buying a Rs. 4300
Nifty put for a premium of Rs. 23 and a Rs. 4700 Nifty Call for Rs. 43. What will be Mr. A net payoff
on expiry if Nifty closes at 3800 ?
Rs. 66
Rs. 434
Rs. 20
0
Question No. 48

Long Call butterfly strategy is used in ����.market.

Bullish
Bearish
Netural and bearish on volatility
Volatile
Question No. 49

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. What is the breakeven point in a covered put
strategy? what is the maximum risk for Mr. XYZ ? what is breakeven point for Mr. XYX ?
Unlimited
Rs. 224
Rs. 4524
Rs. 4324
Question No. 50

Mr. XYZ is bullish about ABC Ltd stock. He buys 100 ABC Ltd at current market price of Rs. 4000
on 4th July. To protect against fall in price of ABC Ltd ( his risk), he buys an ABC Ltd Put option with
a strike price Rs. 3900 ( OTM) at a premium of Rs. 143.80 expiring on 31st July ( Lot size 100).
What profit / loss will Mr. XYZ if ABC closes at Rs. 3400 ?
Profit Rs. 243.80
Loss Rs. 43.80
Profit Rs. 456.20
Loss Rs. 243.80
Question No. 51

A short strangle is �����Strategy.

Bullish
Bearish
Very High level volatility
Little volatility
Question No. 52

What is breakeven point in long straddle strategy ?

Strike price of long call + Net premium paid
Strike price of long put Net premium paid
None of the above
 Any of the above
Question No. 53

A moderately bearish investor will enter into a ______ strategy.

Buy Call
Covered Put
Long Straddle
Sell Put
Question No. 54

In a Short Call Butterfly there should be _____ distance between each strike.
unequal
equal
any
zero
Question No. 55

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. _____.
Rs. 357
Rs. 557
Rs. 457
Rs. 257
Question No. 56

Which of the following statements about a covered call writing strategy is true?
Rewards are unlimited
Break even is Stock Price paid + Premium received
It is a bearish strategy
Rewards are limited
Question No. 57

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.
Bear spread
Short Condor
Long Call Butterfly
Bull spread
Question No. 58

Suppose an Investor Mr. A buys or is holding ABC Ltd currently trading at Rs. 4758. He decides to
write a call of strike price Rs. 5000 for Rs. 39, while simultaneously purchase a Rs. 4700 strike price
put for Rs. 27. What will be net payoff for Mr. A if ABC closes at 5150 ?
-27
-111
254
 -254
Question No. 59

As the stock price / index raises the short call moves in to loss.
TRUE
FALSE
None of the above
Both
Question No. 60

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:
Rs. 2.30
Rs. 3.50
Rs. 1.20
Rs. 5.80