Practice Set - 3 | Practice Set | NISM Series XVI: Commodity Derivatives Certification Examination

Question 1

Which factor has the least effect on option premium near expiry?

Question 2

A seller of options faces unlimited risk when:

Question 3

If an option is exercised early (American), what value component is lost?

Question 4

If a trader buys option just before expiry, risk is:

Question 5

If strike price is far from current price, option is:

Question 6

If an option has very little time left and is OTM, its value will likely:

Question 7

Which scenario leads to maximum confusion for option buyers?

Question 8

A trader buys both call and put options simultaneously expecting large movement. This strategy relies on:

Question 9

If volatility drops sharply after purchasing an option, even with favorable price movement, what may happen?

Question 10

Which option is most sensitive to time decay?

Question 11

If intrinsic value is zero but premium is high, it indicates:

Question 12

A trader experiences loss despite correct market direction. Likely cause:

Question 13

A trader buys deep ITM option instead of futures to:

Question 14

If volatility increases after selling option, seller will:

Question 15

An option trader expects minimal price movement and low volatility. Which position is most suitable?

Question 16

Which scenario leads to maximum time decay?

Question 17

If market remains flat till expiry, option buyer will:

Question 18

If an option expires ATM, payoff is:

Question 19

A call option with strike 100, premium 10, spot 105 results in:

Question 20

Which option provides asymmetric payoff?

Question 21

Which option position benefits most from time decay?

Question 22

Which option is most expensive?

Question 23

Which factor creates biggest uncertainty in option pricing?

Question 24

A trader buys a put option, but the price rises sharply. The loss will be:

Question 25

A trader sells a call option and market rises sharply. Outcome is:

Question 26

If both call and put premiums rise simultaneously, it indicates:

Question 27

Which situation makes options expensive?

Question 28

A call option buyer sees the underlying price rise above strike but still incurs a loss. What is the most likely reason?

Question 29

A deep ITM call option behaves similarly to:

Question 30

Practice Set - 3