Options Trading with CFDs Quiz

1. What is an option contract in CFDs trading?

   A contract to buy or sell the underlying asset immediately
   The right, but not the obligation, to buy or sell at a set price
   A guaranteed profit on the underlying asset
   A fixed dividend payment from the underlying asset

2. Which factor primarily determines an option’s premium?

   The current weather conditions
   The underlying asset’s price, volatility, and time to expiration
   The trader’s account balance
   The broker’s fees only

3. What is the main risk when selling options?

   Limited profit potential
   Unlimited potential losses
   No risk at all
   Fixed returns regardless of market moves

4. Which strategy profits from large price moves regardless of direction?

   Long call
   Short put
   Straddle
   Bull call spread

5. What does delta measure in options trading?

   The change in option price relative to $1 change in the underlying
   The interest rate impact on option price
   The time remaining until expiration
   The volatility of the underlying asset

6. Which Greek measures time decay in an option?

   Gamma
   Theta
   Vega
   Rho

7. What is a bull call spread?

   Buying a call at a higher strike and selling at a lower strike
   Buying a call at a lower strike and selling a call at a higher strike
   Selling a put and buying a call
   Buying a put and selling a call

8. How does vega affect an option’s price?

   It measures sensitivity to changes in implied volatility
   It measures the option’s time decay
   It indicates the delta of the option
   It reflects interest rate changes

9. Which options strategy involves buying a call and put at the same strike price and expiry?

   Straddle
   Strangle
   Bull spread
   Covered call

10. Why is managing the Greeks important in options trading?

    To maximize emotions in trading
    To precisely manage risk and adjust strategies
    Because brokers require it
    To avoid paying commissions

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