General Options Trading MCQs

1. What is the most classic type of options trading?

2. Which of the following is the optimal situation?

3. What is the purpose of using screening factors?

4. When would someone most likely place a stop loss order?

5. What is a covered call?

6. What is an options contract?

7. What should a trader do if one portfolio is outperforming the others?

8. How does selling options help someone with their portfolio?

9. Why would someone buy call options at the same strike price but stagger the expiration date?

10. What is a "straddle"?

11. Why are younger people more apt to take on riskier investments?

12. Why is it important for an investor to know their risk tolerance level before trading options and investing in general?

13. What is the ideal number of portfolios for an experienced trader?

14. What would an investor who is bullish most likely do?

15. What is a "margin account"?

16. Which type of analysis relies on charting?

17. How often would an active options trader perform technical analysis?

18. How would an options trader use the Black Scholes pricing model as a trading strategy?

19. What is meant by a covered call?

20. What is meant by using the straddle stock trading strategy?

21. What is the primary method to mitigate risk?

22. What would be the risk tolerance level of a retired government worker in general?

23. When is the straddle trading strategy appropriate?

24. What is a "call"?

25. Would a person who actively buys and sells options contracts be considered an investor?

26. What is meant by a "butterfly" trading strategy?

27. What is "strike price"?

28. What does an options trader look for when charting?

29. Which of the following is the least risky investment in options?

30. Why would a trader liquidate a portfolio?

31. Why might an options trader have portfolios based on expiration?

32. What is meant by a "bear market"?

33. What is a sideways chart?

34. Why would an options trader invest only in options of companies which have a history of paying dividends?

35. Which of the following is an advantage of having multiple portfolios instead of only one?

36. What happens to an investment if risk is mitigated properly?

37. What is portfolio management?

38. Which of the following is a criticism of both fundamental and technical analyses?

39. Why do investors often expect the beginning of the year stock prices to rise?

40. Why would an investor be unlikely to hold growth, value, small cap, and index portfolios all at once?

41. Which of the following would be a way to limit one's potential losses?

42. Which of the following is an example of options used to mitigate risk?

43. Which of the following would most likely be a way to classify various portfolios?

44. Which of the following would not be an example of managing risk?

45. How often should a trader revaluate the holdings in their portfolios?

46. What factors does technical analysis primarily rely on?

47. What is meant by a "bull market"?

48. What is an "option spread"?

49. What is a "put"?

50. What is the legal requirement regarding portfolios?

51. What is a "strangle"?

52. What skills would technical analysis use primarily?

53. Which of the following is an assumption made by a technical analyst?

54. What is meant "short selling"?

55. What would an investor using the Black Scholes model be doing?

56. What is the relationship between fundamental and technical analyses?

57. What happens when a trader uses a straddle?

58. What is the purpose of candlestick charting?

59. Why would an options trader want to create various portfolios?

60. What is the primary goal of technical analysis?

61. How is risk measured?

62. How does the "Iron Condor" technique limit the downside?

63. What is candlesticking?

64. Which of the following is the most profitable?

65. Why would someone sell call options on a security they own?

66. Which of the following situations has the least risk?

67. Why would an investor not utilize an options trading strategy?

68. Which of the following would help protect against downside risk?

69. What is meant by "long" in a stock or option?

70. What is the "expiration date"?

71. Why is it important to manage risk when trading stock options?

72. What would an investor with a large risk tolerance level most likely do?

73. What does the Monte Carlo method of pricing options attempt to do?

74. What is the offset to limiting downside?

75. What does heavy volume trading indicate?

76. Which of the following would technical analysis include?

77. What would be the objective of a conservative trader's portfolio?

78. Which of the following would be a good example of risk mitigation?

79. What should an options investor do if a call option they own is out of the money and nearing expiration?

80. What would an investor who is employing the straddle technique hope to happen?

81. Which of the following is a common strategy used after an options trader has had a few successful transactions?

82. How would an options investor diversify their portfolio?

83. Which of the following is a way to quantify the risk of a given security?

84. Which of the following would not be an example of managing risk?