Portfolio Margin Test: Each question below is followed by two or more answer cho
ID: 2783003 • Letter: P
Question
Portfolio Margin Test: Each question below is followed by two or more answer choices. After carefully reading each question, select your response by placing a check mark next to the answer you believe is correct. Each question has only one correct answer.
1. Which of the following is the same synthetic position as short
stock, long call?
M a. Short put
M b. Long call
M c. Short call
M d. Long put
2. You have established the following positions:
Long 50 XYZ Jan 820 Calls @ 3
Long 50 XYZ Jan 675 Puts @ 4
What is the traditional margin requirement?
M a. $50,000
M b. $60,000
M c. $35,000
M d. $25,000
3. Which of the following is the same synthetic position as short
stock, short put?
M a. Short put
M b. Long call
M c. Short call
M d. Long put
4. You establish the following position:
Long 100 ABCD 150 Call
Long 100 ABCD 150 Put
If the price of ABCD is $150 at expiration, what is the
resulting ABCD position in your account on the business
day following expiration?
M a. Flat or no position in ABCD
M b. Long 100,000 shares of ABCD
M c. Short 100,000 shares of ABCD
M d. Both B and C
5. The price of ABCD is $25. You establish the following position:
Short 1 ABCD 25 Call @ 2
If the delta of the call is 0.50, what would be the theoretical price
of the option if ABCD increased by $1.00?
M a. $1.50
M b. $2.50
M c. $3.00
M d. $4.00
M e. $4.50
6. Which one of the following is a synthetic long put?
M a. Long stock, short put
M b. Long stock, short call
M c. Long stock, long put
M d. Short stock, long put
M e. Short stock, long call
7. You establish the following position:
Short 1 ABCD 320 Put @ 6
If the delta of the put is 0.50 and the gamma is 0.03, what
would the new delta be if ABCD decreases from 321 to 320?
M a. 0.47
M b. 0.50
M c. 0.53
M d. 0.56
M e. 0.60
8. Which of the following choices is a primary component in
theoretical options pricing calculations?
M a. Volatility
M b. Annual interest rate
M c. Stock price
M d. Days to expiration
M e. Strike price
M f. All of the above
9. You have established the following positions:
Long 500 ABC Nov 1240 Calls @ 5
Long 500 ABC Nov 1205 Puts @ 6
What is the traditional margin requirement?
M a. $500,000
M b. $550,000
M c. $600,000
M d. $700,000
10. Which one of the following choices measures the rate of decline
in value of an option due to time decay?
M a. Delta
M b. Gamma
M c. Theta
M d. Vega
11. With everything being equal as time passes in options, which
one of the following is true?
M a. In the money options delta decrease and out of
money options delta increase
M b. In the money options delta increase and out of
money options delta increase
M c. Both in the money options delta decrease and out of
money delta decrease
M d. In the money delta increase and out of money
options delta decrease
12. Which one of the following choices measures the change in price
of an option for a one point move in the underlying asset?
M a. Delta
M b. Gamma
M c. Theta
M d. Vega
13. To hedge a short stock position in ABCD, you can do all of the
following EXCEPT what?
M a. Buy at the money ABCD calls to open
M b. Buy in the money ABCD calls to open
M c. Sell out of money ABCD puts to open
M d. Sell out of money ABCD calls to open
14. In portfolio margin, equity options and stocks are tested with
+/- 15% price changes. If you buy $100,000 of ABCD stock, what
is the portfolio margin requirement?
M a. $15,000
M b. $25,000
M c. $30,000
M d. $50,000
15. You opened several accounts with XYZ broker. Which of
the following accounts is under identical ownership as your
individual portfolio margin account?
M a. Your Roth Individual Retirement Account
M b. Your Individual Margin Account
M c. Your Joint Account with Rights of Survivorship
M d. Your Corporate Account
M e. Your 401(k) Account
16. You have already been approved for covered call writing but
must be re-approved for which one of the following in order to
participate in portfolio margining?
M a. Purchasing Straddles
M b. Purchasing Spreads
M c. Purchasing Options
M d. Short-selling
M e. Selling Uncovered Options
17. All LEAPS are what?
M a. Unlisted derivatives of equity indices
M b. Options on commodities and futures contracts
M c. Issued with longer life than standard options
M d. Options on Exchange Traded Funds
M e. Options on individual stocks
18. If you write a call, hoping to benefit from the time decay of the
options premium, which one of the following measures would
you use?
M a. Theta, expressed in percentage
M b. Theta, expressed in dollars
M c. Delta, expressed in percentage
M d. Delta, expressed in dollars
M e. Gamma, expressed in percentage
19. Which one of the following choices measures how the delta
of an option will change relative to a one point move in the
underlying asset?
M a. Delta
M b. Gamma
M c. Theta
M d. Vega
M e. Rho
20. Which one of the following is a synthetic long call?
M a. Long stock, short put
M b. Long stock, short call
M c. Short stock, long put
M d. Long stock, long put
M e. Short stock, long call
Explanation / Answer
19. Option b. Gamma is the answer. The gamma of an option is expressed as a percentage and reflects the change in the delta in response to a one point movement of the underlying stock price.
20. Option d. long stock, long put. A synthetic long call is created when long stock position is combined with a long put of the same series. It is so named because the established position has the same profit potential as a long call.
Please post other questions separately. Thanks.