Exam 11: Trading Strategies Involving Options

A trader creates a long butterfly spread from options with strike prices $60, $65, and $70 by trading a total of 400 options. The options are worth $11, $14, and $18. What is the maximum net loss (after the cost of the options is taken into account)?

Which of the following is correct?

Which of the following describes a covered call?

How can a strap trading strategy be created?

How can a strangle trading strategy be created?

How can a strip trading strategy be created?

What is the number of different option series used in creating a butterfly spread?

Six-month call options with strike prices of $35 and $40 cost $6 and $4, respectively. What is the maximum gain when a bull spread is created by trading a total of 200 options?

A stock price is currently $23. A reverse (i.e., short) butterfly spread is created from options with strike prices of $20, $25, and $30. Which of the following is true?

Which of the following creates a bull spread?

Which of the following is correct?

What is a description of the trading strategy where an investor sells a 3-month call option and buys a one-year call option, where both options have a strike price of $100 and the underlying stock price is $75?

Which of the following creates a bear spread?

Which of the following creates a bull spread?

Which of the following describes a protective put?

Which of the following is true of a box spread?

When the interest rate is 5% per annum with continuous compounding, which of the following creates a $1000 principal protected note?

How can a straddle be created?

A trader creates a long butterfly spread from options with strike prices $60, $65, and $70 by trading a total of 400 options. The options are worth $11, $14, and $18. What is the maximum net gain (after the cost of the options is taken into account)?

Which of the following creates a bear spread?