EDQ Set – 5

In the case of futures contract, the profits or losses are received / paid only on maturity – State whether True or False?

If there are three series of one, two and three months futures open at a given point of time, how many calendar spread possibilities arise?

______ is not a derivatives market product.

Even if you do not own the underlying stock, you can sell the stock option for that stock – State whether True or False?

Over-the-counter options are always standardised – State whether True or False?

Calendar spreads carry basis risk and no market risk – hence ______ margins are charged.

A long or short position in a futures contract can be closed by initiating a reverse trade – State True or False?

When it is said that there is cash settlement of an index futures contract, it means that the contract is settled in cash with no delivery of the underlying – State whether True or False?

Which of these complaints against a trading member can an Exchange take up for redressal?

In exercising a Put option on a stock, the option holder acquires from the option writer

When a person enters into a forward contract, the loss that can occur on the position is

You sold a call option on a share. The strike price of the Call was Rs 250 and you received a premium of Rs 16 from the option buyer. What can be the maximum loss on this position?

Clearing Member Mr. Prabhu focuses mainly on proprietary trading, while Clearing Member Mr. Mehta does not do any proprietary trades and does trades only for clients. If both have deposited the same amount of assets with Clearing Corporation, which of the following statements is true?

A tick is

A stock index like Nifty

Generally, other things remaining the same – American options value is lower than that of European options – True or False?

A Trading Member on derivatives exchange does not have Clearing rights – State True or False?

The exercise date and expiration date of a European option is

Mr A sold a put option of strike Rs.300 on ABC stock for a premium of Rs.20. The lot size is 1000. On the expiry day, ABC stock closed at Rs. 250. What is his net profit (+) or loss (-)?

When a PUT option on an index is exercised, the option holder receives from the option writer

Intrinsic value is always positive for in-the-money options and zero for out-of-the-money options – State True or False?

If futures price is higher than spot price of an underlying asset, this is known as

Mr. Ashish is a portfolio manager and he is bullish on the market. What should be his course of action?

The main proof of whether a futures transaction is for speculation or hedging is based on whether there already exists a related commercial position which is exposed to risk of loss due to price movement – State True or False?

What is the role of speculators in the market?

What is an Index Future?

Identify the INCORRECT statement with respect to Tracking error of index funds.

Which type of index is NSE NIFTY?

Identify the strategy in which an investor takes a short position in call option and long position in the underlying stock.

Identify the FALSE statement with respect to trading on the OTC market.

The cost incurred due to the Bid-Ask spread is known as

A future contract

What is the outstanding liability (open position) of the member towards clearing corporation in the number of contracts?

Which of these is an example of derivative contract?

Which of these derivative contracts, once entered into, usually cannot be closed or reversed till their expiry?

Who becomes a legal counter party to every trade in futures transactions on a recognised stock exchange?

What will the option holder receive when he exercises a put option on an index?

When does the Clearing Corporation change the initial margin requirements?

Mark-to-market margins are collected

The facility for lending and borrowing securities is usually necessary for smooth execution of

Identify the strategy which will be most appropriate when volatility is expected to be very low.

Identify the TRUE statement with respect to Option Spreads.

In India, when the option holder exercises a call option on an equity stock,

What is the Initial Margin required to be collected from Trader A and Trader B combined?

True or False: A trading member can clear his trades through a Clearing Member, who may or may not be a Professional Clearing Member.

A trader has a short futures position. If prices rise, the MTM margin account will be

How can a Mutual Fund manager hedge risk for a planned purchase of stocks over a month?

Default risk is also known as

What is a ‘Stock Option’?

On announcement of record date for merger/demerger, unexpired contracts will