Options trading quiz

Test yourself

One question from each lesson in this topic. Pick an answer to see why, then open the lesson if you want to review it.

1. Question 1 of 16

   The drawing shows the result at expiration of buying a call. What does the flat line on the left, below zero, tell you?

   Turn your phone sideways to read the drawing. Tap to close.

   The premium you collect from the sellerThe most you can lose: the premium you paid, however far the stock fallsA loss that keeps growing the lower the stock goes, with no limit

2. Question 2 of 16

   Which diagram shows the result at expiration of buying a put?

   Turn your phone sideways to read the drawing. Tap to close.

   AB

3. Question 3 of 16

   The drawing shows the same chart twice: buried under arrows, then clean with one circled signal at a level. Which version is closer to what an options plan starts from, and why?

   Turn your phone sideways to read the drawing. Tap to close.

   The one buried under arrows: more signals mean more contracts to choose fromThe clean one: a single signal at a clear level gives the entry, stop and target the plan is built onNeither: a good indicator can pick the strike and the expiration for you

4. Question 4 of 16

   The drawing is a 5-minute plan on SPY: an entry, a dotted stop below it and a dashed target above it. You hold a call, and SPY trades down to the dotted line. What do you do?

   Turn your phone sideways to read the drawing. Tap to close.

   Sell the call: the underlying hit your stop, so the idea is wrongHold and wait for SPY to come back, since the call still has time leftBuy more contracts to lower your average price

5. Question 5 of 16

   The drawing shows an uptrend that pulls back in small candles, then closes back up and prints a buy signal, with the target at the prior swing high. In the guide’s swing plan, which moment is the trigger?

   Turn your phone sideways to read the drawing. Tap to close.

   The first small pullback candle, to get in earlyA 1-hour candle closing back in the trend direction from the daily levelThe moment price reaches the prior swing high

6. Question 6 of 16

   The drawing shows an option’s time value over time: it shrinks slowly, then fast in the last days. What does that mean for a 0DTE option?

   Turn your phone sideways to read the drawing. Tap to close.

   Little decay is left, so holding it to the close is the safest choiceIt sits on the steepest part of the curve, so a flat market alone can take the premium to zeroTime value no longer matters; only the direction of the underlying does

7. Question 7 of 16

   In the drawing, a buy signal prints where price rejects a support zone, and a trader sees it on the SPY chart. SPY is at 650.00 and SPX at 6,520.00, a ratio of 10.03. If the entry on SPY is 650.20, which SPX level matches it?

   Turn your phone sideways to read the drawing. Tap to close.

   6,502.0, because SPX is always exactly 10 times SPYAbout 6,521.5, using the live SPX ÷ SPY ratio650.20, because the same signal means the same number

8. Question 8 of 16

   Your chart plan expects the move to your target to take about one week on your timeframe. Which expiration fits the rule of thumb in this guide?

   About two weeks or more, roughly twice the expected timeAbout one week, to match the move and keep the premium lowThe same-day contract, because short-dated options react the fastest

9. Question 9 of 16

   A call has a delta of 0.53 and you hold three contracts. For small moves, about how many shares does the position behave like?

   About 160 sharesAbout 53 sharesAbout 300 shares

10. Question 10 of 16

    In the drawing, price coils in a tight, quiet range before it breaks out. If a stock has been that quiet but its options are priced at a much higher implied volatility, what does that usually mean?

    Turn your phone sideways to read the drawing. Tap to close.

    The stock is about to break out upward, as in the drawingThe market is pricing a bigger move ahead, often around an event such as earningsHistorical volatility must be wrong, because the two numbers should match

11. Question 11 of 16

    You buy one call with a $500 strike for a $4.50 premium. The stock closes at $503 on expiration day. What is the result?

    A $300 profitA $450 lossA $150 loss

12. Question 12 of 16

    In the drawing, red bars are put open interest and green bars are call open interest at four strikes of one expiration. Which strike has the most open puts?

    Turn your phone sideways to read the drawing. Tap to close.

    ABCD

13. Question 13 of 16

    In the drawing, the put/call ratio spikes far above its average twice. What does the second spike show?

    Turn your phone sideways to read the drawing. Tap to close.

    A high ratio is a dependable buy signalThe size of a spike tells you the size of the next rallyAn extreme reading can come before lower prices, so the contrarian reading can fail

14. Question 14 of 16

    In the left panel, dealers are estimated to be long gamma. As price rallies toward the top of the band, what does their delta hedging do?

    Turn your phone sideways to read the drawing. Tap to close.

    Sells some of the underlying, leaning against the rallyBuys more of the underlying, adding to the rallyNothing: long-gamma dealers never need to rehedge

15. Question 15 of 16

    In the drawing, the dashed lines are the strikes of four calls you own on the same stock, all expiring today. The stock closes at the dot at 4:00 PM. Which call is exercised automatically if you do nothing?

    Turn your phone sideways to read the drawing. Tap to close.

    ABCD

16. Question 16 of 16

    The stock trades at $100. Which call in the drawing is a deep in-the-money LEAPS that could stand in for owning the shares?

    Turn your phone sideways to read the drawing. Tap to close.

    ABCD