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Portfolio Margin question/answer - Review and feedback?

Options | Elite Trader - www.elitetrader.com
Hi,

Need to have someone review and provide your input on answers to this portfolio margin test. Any input is appreciated.

1. You establish the following positions:

Long 1,000 OEX JUN 640 Calls @ $21.00

Long 1,000 OEX JUN 640 Puts @ $10.76

What is the traditional margin requirement?

a. $3,176,000

b. $1,588,000

c. $1,024,000

d. $317,600

e. None of the above

2. You establish the following position:

Short 1 ABC 50 Put @ $2.25

If the price of ABC is $40 at expiration, what is the profit or loss from

this short put position?

a. $750 Profit

b. $750 Loss

c. $775 Profit

d. $775 Loss

e. $1,000 Loss

3. Which of the following is NOT permitted when an account is restricted

to “Liquidation Orders Only”?

a. Depositing additional funds or securities to the account

b. Placing an order to open an naked position

c. Buying to close an uncovered position

d. Selling to close a long position

e. None of the above is permitted

4. You have opened several accounts with XYZ Broker. Which of the

following is an account under identical ownership as your individual

portfolio margin account?

a. Your Roth Individual Retirement Account

b. Your Individual Margin Account

c. Your Joint With Rights Of Survivorship Account

d. Your Corporate Account

e. Your 401k Account

5. You have already been approved for covered call writing but must be

re-approved for which of the following in order participate in portfolio

margining?

a. Purchasing Straddles

b. Purchasing Spreads

c. Purchasing Options

d. Short-selling

e. Selling Uncovered Options

6. The following positions belong in the same “security class” or “product

group” as a long position in MSFT, EXCEPT

a. Short puts with the obligation to purchase MSFT shares

b. Short calls with the obligation to sell MSFT shares

c. Long position in the QQQQ, tracking the NASDAQ 100 Index, of

which MSFT is a major component

d. Long LEAPS options on MSFT

e. Long position in MSFT preferred shares

7. All LEAPS

a. are unlisted derivatives of equity indices

b. are options on commodities and futures contracts

c. are issued with longer life than standard options

d. are options on Exchange Traded Funds.

e. are options on individual stocks

8. Which of the following is a synthetic long put?

a. Long stock, short put

b. Long stock, short call

c. Long stock, long put

d. Short stock, long put

e. Short stock, long call

9. To hedge a long position in IBM, a customer can do all of the following

EXCEPT

a. Buy to open at the money IBM puts

b. Buy to open in the money IBM puts

c. Sell to open out of the money IBM calls

d. Sell to open in the money IBM puts

e. All of the above

10. A customer establishes the following position:

Short 1,000 IBM 100 Call

Short 1,000 IBM 100 Put

If the price of IBM is $100 at expiration, what is the resulting IBM

position in the customer’s account on the business day following the

expiration?

a. Flat or no position in IBM

b. Long 100,000 shares in IBM

c. Short 100,000 shares in IBM

d. Both (b) and (c)

e. Unable to determine

11. A call writer hoping to benefit from the time decay of the option

premium would use which of the following measures?

a. Theta, expressed in percentage

b. Theta, expressed in dollars

c. Delta, expressed in percentage

d. Delta, expressed in dollars

e. Gamma, expressed in percentage

12. Which of the following measures the change in an option value given

one percent change in the volatility?

a. Delta

b. Gamma

c. Theta

d. Vega

e. Rho

13. Which of the following measures the change in an option value given

one percent change in interest rate?

a. Delta

b. Gamma

c. Theta

d. Vega

e. Rho

14. Which of the following is NOT a primary component in theoretical

option pricing calculation?

a. Annual interest rate

b. Quarterly dividend amount

c. Change in volatility

d. Strike price

e. Days to expiration

15. The price of IBM is $100. You establish the following position:

Long 1 IBM 100 Call @ $4.50

If the delta of the call is .50, what would be the theoretical price of the

option if the stock decreased by $1?

a. $2.50

b. $3

c. $3.50

d. $4

e. $4.50

16. You establish the following position:

Short 1 XYZ 100 Put @ $4

If the delta of the put is 0.50 and the gamma is 0.0673, what would be

the new delta if XYZ increases from $100 to $101?

a. 0.3654

b. 0.4327

c. 0.5673

d. 0.6346


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