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Series 3 - National Commodities Futures
Options - Answers
- D. A would be correct for an in-the-money option.
- A. II is at-the-money, not in it.
- A. The others are bearish strategies.
- D. The rest are false.
- C. The rest are false.
- B. Strangles use different strike prices, both of which are out of the money.
- A. Straddles are used when the investor is unsure of the market's direction
- B. Strike price + net premium. The mnemonic device is Calls Add to Lower (CAL)
- C A is incorrect as synthetic options utilize a combination of futures and options. A future obligates buyer and seller alike, whereas options obligate only sellers.