Equity Derivatives Quiz 6

The relationship between the sopt price and the future price is known as

Longer the time to maturity of a PUT option, higher will be its _______.

The price of Stock P and the price of Stock Q is the same at Rs. 500. If everything else is constant and if Stock P is more volatile than Stock Q, the call option on _______ will be priced higher.

Identify the correct statement with respect to a short position in a PUT option.

Which of these is not included in the Indian equity derivatives market?

The last Thursday is usually the last trading day of a future series. If it is a holiday on this day then which will be the last trading day?

Which tax is applicable on the transactions done on a recognised Indian stock exchange?

Option premium is the price which is paid by the _______.

A ‘closing buy transaction’ is a buy transaction which will have the effect of offsetting a _______.

Which of these is an order with a time condition?

Mr. Subu has buy position in a stock, he can square-off his long position in the sotck by selling______

For extra-ordinary dividends above 5% of the market value of the underlying security, the amount of dividend is ____ the strike price of options on the stock.

Initial Margin can be paid by _______.

Which of these is true for an ‘in-the-money’ option?

A CALL OPTION will give the buyer the ______.

Which of the following options on ABC Ltd stock with a strike price of Rs.500 has the highest time value?

The New York stock exchange has two important indices – Dow Jones (DJIA) and Standard and Poor 500 (S&P 500). The DJIA is a ______ index where as the S&P 500 is a ______ index.

Identify the correct statement for ‘In-the-money’ Call Option?

A Clearing member has to deposit liquid assets with the Clearing Corporation but these liquid assets cannot comprise entirely of Equity Shares

A trader has sold a ABC futures contract (contract multiplier 50) at 2500 and bought it back at 2700, what is the gain/loss for the trader?

Identify the CORRECT statement?

If the futures price is declining but open interest is increasing, it indicates a___________.

Intraday trading can be done in the case of

Everest Ltd. entered into a contract with Bank of Baroda under which Everest Ltd will receive interest at 7.5% p.a. and pay interest to Bank of Baroda at MIBOR ona
principal of Rs. 25 crore for a period of 3 years from today. This contract is known as

As strike price of put option is taken down, its intrinsic value______.

SCORES is:

Everest Mutual Fund had floated a new fund offer and received Rs. 500 crores from the investors. The fund manager of this fund is planning to invest this amount over the
next one month in buying 25 high growth stocks. He can hedge the risk in this planned purchase of stock by executing_______.

When there is high volatility in the stock markets, the Bid-Ask spreads will generally_____.

If all other features are same, an American Call Option will not have a value less than that of European option.

The equity shares which have been given by the clearing members to the clearing corporation as a part of liquid assets are generally NOT marked to market on a regular
basis – State True or False?

In the Indian derivatives exchange, the matching of bids and offers take place_______.

gives the right to sell an asset for a certain price on or before a specified date.

Identify the CORRECT statement from the given options

As per the Income Tax Act, any loss on derivatives transaction can be set-off against which income in the same year?

Mr. Jones buys a put option with higher strike price and at the same time sells another put option with lower strike price, both on the same underlying share and same expiration date. This strategy is known as ________.

A member has two client M and N. M has bought 300 contracts and N has sold 250 contracts in October ABC futures series. Calculate the outstanding liability (open
position) of the member towards Clearing Corporation in number of contracts?

In the books of account of the client, the balance in the Initial Margin account on the Balance Sheet date must be shown under the head_____.

Calculate the Intrinsic Value for the following Call option :
Current price of the stock – Rs. 340.
Call option of strike price Rs. 300 is quoted at Rs. 56

To confirm whether a futures transaction is for hedging or for speculation is centered on ____ .

Who decides the daily settlement price for equity derivatives contracts?

If there is a debit balance in the ______, it represents anticipated loss on a futures contract.

Which of these strategy has a same pay-of profile as that of Covered Call strategy?

Value-at-risk measures the __________.

Arbitrageurs are considered to be critical link between ____________.

The MTM (Mrk-to-market) margin is always equal to the Initial margin – True or False?

The lot size for contracts on individual stock options on NSE is ____________.

Rho is linked to the ___________.

An investor, who is anticipating a broad stock market fall, but is not willing to sell his
entire portfolio of stocks, can offset his potential losses by shorting a certain number of
Index futures.

If the share price of ABC share increases by Rs 5 and the delta of its option is 0.5, then by how much will the option price rise ?

The buyer of an option is one who has a______but not the____to buy/sell the underlying asset in the contract.

According to the corporate hierarchy for users defined in the trading system for stock exchanges, the exposure limits for the branches of the broking firm can be defined
only by the ______.

At a kprice level of Rs. 6300, what will be the value of one lot of ABC futures contract (Contract multiplier 50)?

In a one-month CALL option on PQR stock with a strike price of Rs. 700 is Out-of-the money. Identify which of these could be the spot price of PQR stock?

Identify the FALSE statement with respect to Impact Cost.

______________ is an example of a derivative on energy resources.

Which function of the Exchange is focussed at maintaining stability in the derivatives market?

Which are the two most important things to be considered while constructing an index?

Mr. Surya has gone long on April Futures on ABC stock at 1200. He will make a loss if futures price move to __________.

A trading member has to issue which of these documents to all its clients?

Which of these derivative contracts cannot be usually closed or reversed till their expiry?

A buyer of Out-Of-the-Money (OTM) Call option is___________________ .

Mr. Manoj is Nifty trader and feels that Nifty has fallen sharply in the last few days to 17500 levels and should bounce back to 17700 levels over the next week. Which
option based strategy should Mr. Manoj use to back his view?

A______ is not a Trading Member but clears and settles the trades of Trading Members and institutional clients.

Identify which of these is NOT an example of hedge.

Speculators are those who wish to ______ risks whereas hedgers are those who wish to ____risks.

What is the ‘ASK PRICE’?

The terms of the contract are decided by mutual agreement between the parties in a futures contract. State whether True or False?

When the order is ‘Immediate-Or-Cancel’ then the unmatched portion of the order is

Which of the following is closest to the forward price of a share, if Cash Price =
Rs.750, Forward Contract Maturity = 6 months from date, Market Interest rate = 12%?

The IPF (Investor Protection Fund) for the derivatives segment is

Mr. Sriniwas takes a short position in a call option but does not take any offsetting position in the underlying stock. This strategy is known as __________.

With regards to futures market, BASIS is the ___________ .

If the futures price of a stock is_____and open interest of the futures contract of that stock is ____, then it signals a bullish trent.

Each forward contract can have a different delivery location, a different maturity date and a different contract size. State whether True or False?

State whether True or False – The Clearing Corporation of an Exchange has the power to disable a defaulting clearing member from trading further.

Mr. Ashish had purchased 25 PUT options ona stock X by paying a premium of Rs 20 per put (strike price of Rs 180). The stock price has closed at Rs 240 on the exercise
date. In such a situation. Mr. Ashish will choose to _____ .

What does ‘Contract Month’ mean?

How can an open position in a futures contract be closed?

If you are a seller of put option, you expect____ of the underlying asset.

An investor has implemented a Short Hedge using stock futures. This is done to protect ______.

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

As compared to the other financial products mentioned here, which one is more difficult to understand?

For setting limits on his trading members clearing through him, a Clearing Member will have to consult______.

Strike price is that price at which the ______ can purchase (in case of a call) or sell (in case of put) the underlying asset by exercising the option.

Identify the strategy which has a ‘limited potential gain with limited possible loss’.

In India, when the option holder exercises a ITM Call Option on a stock,

When the initial margin is kept at lower levels, it becomes attractive for market participants to transact in the derivatives market – State whether True or False?

Identify the TRUE statement with respect to Futures Contracts?

The Unique Client Code, which is allotted by the broker, is linked to the _______.

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

Which type of order will you place to buy/sell a certain quantity of a share at a specified price or better?

Ms. Mehta sold a Put option of strike Rs 500 on POR stock for a premium of Rs 50. The lot size is 1000. On expiry day, POR stock closed at Rs. 440. What is Ms. Mehta’s net
profit (+) or loss (-) ?

The volatility estimation methodology

The calculation of premium of an option is a function of ____.

Mr. Deepak wants to buy 20 contracts of October series at Rs. 3500 and Mr. Suraj wants to buy 12 contracts of November series at Rs. 3600. Lot size is 50 for both these
contracts. The initial margin is fixed at 8%. How much initial margin is required to be collected from both these traders by the broker?

Identify the TRUE statement –

Is the statement correct or incorrect – A hedged portfolio will give higher returns than unhedged portfolio at all times.

A trader has taken a short position of one contract in September ABC futures (Contract Multiplier 50) at a price of Rs. 1200. When he closed this position after some days,
he realised that he has made a profit of Rs. 8000. Identify the action which would have enabled him to generate this profit of Rs. 8000.

Astock is trading at Rs 100. Mr. Ashwin buys a Straddle at a strike price of 100 and pays a premium of Rs.10 for the Call option and Rs.5 for the Put option. Based on this
information, identify the correct statement.

______is a cost to the market participants but is not mentioned in the contract note.