NISM I: Lesson 7

The party with a long position in a call option is:

The party who takes a short position in a Call option is a:

The option buyer has the right but doesn’t have obligation to buy or sell an asset (underlying) on or before a specific time.

The obligation to buy an underlying asset in a Put contract, when the second party to contract exercise its right to sell is essentially with the:

The buyer _________ the option premium in a Call option, the seller ____________ the option premium in a Put option.

USDINR spot is trading at Rs 73.45. The expiry date is Oct 30. A buyer of a 73.50 call, wishes to exercise her right on 15 October. She can exercise her right on 15^th October in:

American options are generally more expensive than European options (Same strike price and expiry month).

The lot size for USDINR Call option is 1000. USDINR is trading at Rs. 72.25. The option premium for 72.50 Call is Rs 0.70. What is the total value of premium for the trade?

Which of the following are the similarities between options and futures?

A Call option buyer will exercise the option only if the price of underlying asset is higher than the strike price and premium paid. True or False?

A put option buyer will exercise the option only if the price of underlying asset is higher than the strike price and the premium paid. True or False?

In OTC option market, the select ___________ are permitted to be market makers and ___________  are allowed to be net buyer of options:

A corporate can book any number of Options, with unlimited tenor in OTC market. True or False?

A corporate has to submit a proof of underlying trade transaction to the bank, it is buying the option with, before booking the option contract. True or False?

In currency option market, every option is a call and put on different currency. True or False?

EURINR was trading at Rs.83.40. The 83.50 CE for near month expiry was trading at Rs.0.65. The spot price is:

USDINR was trading at Rs.73.50 in the cash market. Mr Raghav, purchased the 73.75 Call for near month expiry at Rs. 0.35. The exercise price is:

RBI permitted banks to offer foreign currency – INR American options to its customers from July 7, 2003. True or False?

EURINR is trading at Rs. 84.30. The near month 84.50 Put option was trading at Rs. 0.80. The lot size is 1000. The Spot Price is ________. The Strike Price is __________ . The Premium is ___________

USDINR is trading at Rs. 73.20. A call with the strike price at 73.50 is:

EURINR is trading at Rs. 82.30. A call with strike price 82.25 has a premium Rs.0.20. The call is said to be:

For a Call, if Strike Price – Spot Price > 0, the call is said to be:

GBPINR is trading at Rs.95.20. The 95.50 Put has a premium of Rs. 0.60. 95.50 Put is said to:

JPYINR is trading at 64.25. The 63.75 Put has a premium of Rs. 0.15. The 63.75 Put is said to be:

EURINR is trading at Rs.82.35 in the spot market. A 82.50 put for Baba Industries is ______________ & a 82.50 call for Baba Industries is ________________.

If the underlying in USDINR is at 73.50, the 73.50 Call & 73.50 Put are both At the Money (ATM).

The option premium is made of:

The spot price of USDINR is Rs. 72.20. The option premium of 71 Call is Rs. 1.55. What is the time value of 71 Call?

The underlying price of EURINR is Rs. 82.25. What is the intrinsic value of a 82.50 Call which has the option premium = Rs. 0.35?

If the USDINR is trading at Rs 73.50 (underlying price), fill in the gaps as per the data given

Which of the option will have Intrinsic value?

The intrinsic value of an ATM put is equal to:

The value of underlying USDINR is Rs. 72.35. The premium of a 72.50 Put is Rs. 0.65. The intrinsic value is:

If the USDINR is trading at Rs. 73.70 (underlying price), fill in the gaps as per the data given:

In all OTM puts, Intrinsic Value is equal to:

Open Interest of an Option is the:

Binomial pricing model is accurate, but is very time consuming & lengthy at time. True or False?

According to Black Scholes model of option premium, which of the following is not used in deriving the theoretical value of Call or Put option:

____________ is the amount of change in value of Call or Put option to a one point change in volatility.

__________ is the amount an option value will change based on a one percentage-point change in interest rates.

Choose the correct option regarding Delta

1. Delta measures the options price sensitivity to small changes in the price of underlying.
2. Puts have positive Delta, Calls have negative delta

Which will have a higher Delta value?

The change in Delta, to a one-point change in price of underlying is called as:

Which will have the highest Gamma?

___________ is the amount of change in Call or Put value for a one day change in time to expiration.

Theta for a long Call & Put option is:

A high Theta is good for a ________________

Option price is not dependent on:

USDINR underlying is at Rs. 73.25. All other things remaining same, if the underlying price goes up, premium of 73.50 Call.

EURINR underlying is at Rs. 84.20. All other things remaining same if the underlying price decreases by 0.50 points, premium of 84.00 Put.

USDINR is trading at Rs. 73.70. All other things remaining same, the premium of 74.25 call would be _________ than 73.25 call.

All other things remaining same, the premium of a higher strike price Put will be ____________ than the premium of a lower strike price put.

Risk free rate is __________ related to Call premium.

The central bank is about to announce the latest policy today. Market is expecting a 50 point cut (decline) in risk free rate. All other things remaining same, Call premium will:

The central bank is about to announce the latest policy today. Market is expecting a 50 point increase in risk free rate. All other things remaining same, Put premium will:

In response to an expectancy of global trade war, market volatility is expected to go up. As a result of this:

All other things remaining the same, as the time to expiry nears, the premium of Call:

All other things remaining same, as the expiry nears, the Call & Put premium _______ . A ______________ makes profit

Choose the correct combination regarding call option

1. For a call option buyer, the maximum loss is equal to premium paid
2. For a call option writer, the maximum profit is equal to the premium received
3. For a call option buyer, the maximum profit is premium paid

Choose the correct combination regarding Put option

1. For a Put option buyer, the maximum loss is unlimited.
2. For a Put option writer, the maximum profit is equal to premium received.
3. For a Put option buyer, the maximum profit is the premium paid.

Which of the following have asymmetrical payoffs?

Kartik is long on a USDINR 73.50 Call at Rs. 0.35, when underlying spot price was at Rs.73.20. The expiry price of underlying was Rs. 73.90. What is the Break Even Price (BEP)?

Mayank is long on EURINR 84.50call at Rs. 1.35. The underlying USDINR is at Rs. 84.00 What profit/ loss will Mayank make if at expiry, EURINR is at Rs. 84.15? (1 lot = 1000 units)

Mrinal is holding a USDINR 72.75 Call at Rs 0.70. The underlying spot rate is Rs. 72.85. What profit/ loss will Mrinal make if at expiry, USDINR is at Rs. 74.20? (1 lot= 1000 units)

Complete the table as per given data:

Current Underlying price (USDINR) = Rs. 73.50. Prakash purchased a 73.25 Call at Rs. 0.35

(1  Lot = 1000 units)

Mohan is long on an OTM call. Mr. Mohan is:

Khushbu is short on USDINR 73.50 Call at Rs. 0.60, when underlying was at Rs 73.75. The expiry price of underlying was Rs. 74.25. What is the Break Even Price (BEP)?

Raghubir has written a EURINR 80.50 call at Rs. 2.60. The underlying EURINR is at Rs. 81.75. What absolute profit/ loss will Raghubir make if at expiry, EURINR is at Rs. 79.80 (1 Lot = 1000 units)?

You have sold a USDINR 70.50 Call at Rs 1.70. The underlying is at Rs.  71.50. At expiry the underlying was at Rs. 71.50. What is your Profit/ Loss?

(Consider 1 Lot = 1000 units)

Complete the table as per given data:

Current Underlying price (EURINR) = Rs. 83.50. Kartik wrote a 83.25 Call at Rs. 0.50 (Consider 1 Lot = 1000 units)

Shrujit has written a USDINR Call. Shrujit is:

Kalam is holding a GBPINR 95.50 Put at Rs. 1.25. The underlying is at Rs. 95.00. What is the Profit/Loss made by Kalam, if at expiry, underlying is at Rs 93.00? (Consider 1 Lot = 1000 units)

Anticipating appreciation in INR, Khyati bought a USDINR 73.50 Put at Rs. 1.20. The underlying was trading at Rs. 73.00. What Profit/ loss did Khayati made if underlying expires at Rs. 75.20. (Consider 1 Lot = 1000 units)?

Complete the table as per given data:

Current Underlying price (USDINR) = Rs. 72.30.  Yamini bought a Rs 72.50 Put at Rs. 0.55.

(Consider 1 Lot = 1000 units)

Karandeep has a Long put of USDINR. Karandeep is:

Anamika wrote 85.50 Put of EURINR at Rs. 2.25. The underlying price was Rs. 84.15. The breakeven price is:

Shama wrote 82.50 Put of EURINR at Rs. 1.70. The underlying price was Rs. 81.90. The underlying price at expiry was Rs. 83.85. The absolute profit/loss is?

(Consider 1 Lot = 1000 units)

Onkar wrote a 94.50put of GBPINR at Rs. 1.80. The underlying was trading at Rs. 93.75. If at expiry, underlying was at Rs. 90.70, what is the profit/ loss of Onkar?

(Consider 1 Lot = 1000 units)

Complete the table as per given data:

Current Underlying price (USDINR) = Rs. 72.55. Geeta wrote Rs. 72.75 put at Rs. 0.45. (Consider 1 lot = 1000 units)

Aamir wrote a Put of USDINR. Aamir is:

Who amongst the following is bullish on markets?

Who amongst the following is bearish on Market?

If the markets move up, which of the following will not give you profits?

If the price of USDINR 72.50 Call option is quoted as Rs. 0.32 / 0.35 (bid price /ask price). At what price could a person buy the call option?

If the price of USDINR 73.50 Put option is quoted as Rs. 0.46/0.48 (bid price /ask price). At what price could a person sell the put option?

If on Oct 14, 2018 USDINR spot price was Rs. 73.25. The premium for 74 Call of October expiry is Rs.0.20/0.22 & the premium for 72.50 Put of October expiry is Rs. 0.15/ 0.17. Tushar buys the 74 Call & sells 72.50 Put. At the expiry RBI reference rate of USDINR was Rs. 71.50. How much net profit/loss did Tushar made per USD?

USDINR spot price was Rs. 72.20. The premium for 72 Call of October expiry is Rs.0.70/0.72 & the premium for 72 Put of October expiry is Rs. 0.25/ 0.27. A person buys the 72 Call & buys 72 Put. At the expiry RBI reference rate of USDINR was Rs. 73.50. How much net profit/loss did the person made per USD?

USDINR spot price was Rs. 72.50. The premium for 73 Call of November expiry is Rs.0.30/0.32 & the premium for 73 Put of October expiry is Rs. 0.85/ 0.87. Radhika sells the 73 Call & 73 Put simultaneously. At the expiry RBI reference rate of USDINR was Rs. 71.50. How much net profit/loss did Radhika make per USD?