Options Basics Quiz
New to options? Run through these six fundamentals and see how solid your foundation really is. Each answer comes with a short explanation.
Pick an answer for each question — your score appears at the end.
Question 1What does one standard US equity option contract control?
One standard US equity option contract represents 100 shares of the underlying stock.
Question 2Which type of option gives the holder the right to BUY the underlying?
A call gives the right to buy; a put gives the right to sell.
Question 3The price you pay to buy an option is called the…
The premium is the market price of the option, paid by the buyer to the seller.
Question 4The fixed price at which an option can be exercised is the…
The strike (exercise) price is the agreed price for buying or selling the underlying.
Question 5An option with no intrinsic value at expiration expires…
If it is out of the money at expiration it has no value left and expires worthless.
Question 6Buying an option gives you a right; selling (writing) one gives you an…
The writer takes on the obligation to deliver if the buyer exercises.
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