Step #1: Questions
Use the following picture for questions 1-3.
1. In the game of Plinko, a quarter is most likely to go in this bucket:
a. 1
b. 4
c. 8
d. 12
2. In the game of Plinko, the highest prize is offered to the person whose coin lands in:
a. 1
b. 4
c. 8
d. 12
3. If we played this game and collected the coins in a bin; then, after many times of playing, the coins would form the shape of:
a. a Triangle
b. a Normal Distribution Curve
c. a Rectangle
d. No shape. Most of the coins would end up near the end buckets.
4. The probability of a stock going higher over the next week starting from today’s stock price is approximately:
a. 25%
b. 50%
c. 75%
d. 100%
5. True or False: Calls give you the obligation to buy a stock at a certain Strike Price until the Expiration Date.
6. Fill in the following table with the Options Value. Assume it is Expiration.
7. Fill in the following table at Expiration with ATM, OTM, or ITM.
8. True or False. You can only sell a Call Option at Expiration.
b. The Options Premium
c. The Options Probability Rated.
d. The Options Strike Price 10.
10. Today is January 1st. Put these in order from least value to highest value:
a. $105, $125, $115
b. $105, $115, $125
c. $125, $115, $105
d. $125, $105, $115
11. Fill in the following table with the Options Value. Assume it is Expiration.
12. Fill in the following table at Expiration with ATM, OTM, or ITM.
13. True or False. Given the same expiration, a higher strike Put Option is always more valuable than a lower strike Put Option.
14. Today is January 1st. Put these in order from least value to highest value:
a. $105, $115, $100
b. $100, $115, $105
c. $100, $105, $115
d. $115, $105, $100
15. True or False. Given the same expiration, a higher strike Call Option is less valuable than a lower strike Call Option because there is less of a chance for the stock to rise above the higher strike than the lower strike.
16. True or False. Longer dated options are always more expensive than shorter dated options.
17. Today is January 1st. Put these in order from least value to highest value:
a. Jun, Feb, Dec
b. Feb, Jun, Dec
c. Feb, Dec, Jun
d. Dec, Jun, Feb
18. Using the assumptions given, put these in order from least value to highest value. Note, it’s more important to understand the reason behind your answer, than the answer itself. If you get stuck, force yourself to make an educated guess.
Assumption:
Today is January 1st
Stock = $100
The stock issues no dividends and interest rates are 0%
Step #1: Questions
Use the following picture for questions 1-3.
1. In the game of Plinko, a quarter is most likely to go in this bucket:
a. 1
b. 4
c. 8
d. 12
2. In the game of Plinko, the highest prize is offered to the person whose coin lands in:
a. 1
b. 4
c. 8
d. 12
3. If we played this game and collected the coins in a bin; then, after many times of playing, the coins would form the shape of:
a. a Triangle
b. a Normal Distribution Curve
c. a Rectangle
d. No shape. Most of the coins would end up near the end buckets.
4. The probability of a stock going higher over the next week starting from today’s stock price is approximately:
a. 25%
b. 50%
c. 75%
d. 100%
5. True or False: Calls give you the obligation to buy a stock at a certain Strike Price until the Expiration Date.
6. Fill in the following table with the Options Value. Assume it is Expiration.
7. Fill in the following table at Expiration with ATM, OTM, or ITM.
8. True or False. You can only sell a Call Option at Expiration.
b. The Options Premium
c. The Options Probability Rated.
d. The Options Strike Price 10.
10. Today is January 1st. Put these in order from least value to highest value:
a. $105, $125, $115
b. $105, $115, $125
c. $125, $115, $105
d. $125, $105, $115
11. Fill in the following table with the Options Value. Assume it is Expiration.
12. Fill in the following table at Expiration with ATM, OTM, or ITM.
13. True or False. Given the same expiration, a higher strike Put Option is always more valuable than a lower strike Put Option.
14. Today is January 1st. Put these in order from least value to highest value:
a. $105, $115, $100
b. $100, $115, $105
c. $100, $105, $115
d. $115, $105, $100
15. True or False. Given the same expiration, a higher strike Call Option is less valuable than a lower strike Call Option because there is less of a chance for the stock to rise above the higher strike than the lower strike.
16. True or False. Longer dated options are always more expensive than shorter dated options.
17. Today is January 1st. Put these in order from least value to highest value:
a. Jun, Feb, Dec
b. Feb, Jun, Dec
c. Feb, Dec, Jun
d. Dec, Jun, Feb
18. Using the assumptions given, put these in order from least value to highest value. Note, it’s more important to understand the reason behind your answer, than the answer itself. If you get stuck, force yourself to make an educated guess.
Assumption:
Today is January 1st
Stock = $100
The stock issues no dividends and interest rates are 0%
