Beyond Insights wrote a post · Sep 29 14:14

[QUIZ] Unlock the Power of Options - Session 3

Test your knowledge after our Options webinar series Session 3!
Let us know your answers in the comment section.

1. Which of the following is a FALSE statement about Implied Volatility (“IV”)?

a. IV is a major component of the time value of options.
b. Vega is the measure of the change in options premium relative to a 1 percent change in IV.
c. An IV Rank of 0% is considered low compared to the stock’s IV range for the past year.
d. IV is derived from the PAST price movement of the stock.

2. IV Rank measures how often the current IV has been exceeded in the past year.

a.TRUE
b.FALSE

3. What are some of the key characteristics of LEAPS?

i. Expiry is typically short, less than 7 days
ii. Time decay for is slow and steady.
iii. Flexible and can be combined with other strategies
iv. Premium for LEAPS is more expensive.

a. i, ii and iv
b. ii, iii and iv
c. ii and ii
d. All of the above

4. ABC company’s current stock price = $100.80
The premium for the ATM LEAPS ($100 strike) with 1 year to expiry = $12.00
LEAPS Delta: 0.55

If we want only want to buy the LEAPS when the stock price reaches $100, how much is the projected LEAPS premium?

a.$12.44
b.$12.55
c.$11.56
d.$87.80

5. Which of the following statements are TRUE with regards to LEAPS?

i.The risk of the LEAPS is limited to the premium paid.
ii.When our LEAPS is deep in-the-money, we can roll-over to a higher strike ATM LEAPS to protect our profit.
iii.LEAPS normally has less liquidity with wider bid-ask spread.
iv.Just like stocks, LEAPS is entitled to dividends.

a. i, ii and iii
b. All of the above
c. i, iii and iv
d. ii and iii

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