Options Trading Quiz

This free 15-question quiz checks your understanding of options basics, the Greeks, spreads and assignment, with five questions per level. Every answer has a short explanation, and the full answer key is below.

Answer key

1. 1. What does a call option give its buyer?

   Answer: The right to buy shares at the strike

   A call is the right, not the obligation, to buy at the strike before expiration. Call option

2. 2. How many shares does one standard US stock option cover?

   Answer: 100

   The standard contract multiplier is 100. Contract multiplier

3. 3. A premium is quoted at $2.50. What does one contract cost?

   Answer: $250

   $2.50 × 100 = $250. Premium

4. 4. You buy a $50 call for $2. What is the breakeven at expiration?

   Answer: $52

   Call breakeven = strike + premium. Breakeven

5. 5. Stock is $105. Which option is in the money?

   Answer: $100 call

   A call is ITM when the strike is below the stock price. In the money

6. 6. Which Greek measures time decay?

   Answer: Theta

   Theta estimates value lost per day. Theta

7. 7. What usually happens to IV right after earnings?

   Answer: It drops (volatility crush)

   Uncertainty is resolved, so implied volatility tends to fall. Volatility crush

8. 8. Bull put spread: sell $95 put at $2, buy $90 put at $0.80. Max loss?

   Answer: $380

   (Width $5 − credit $1.20) × 100 = $380. Bull put spread

9. 9. A covered call combines…

   Answer: Long stock + short call

   You own 100 shares and sell a call against them. Covered call

10. 10. What's the max loss on a long put?

    Answer: The premium paid

    Buying an option risks only the premium. Long put

11. 11. An iron condor profits most when the stock…

    Answer: Stays between the short strikes

    It's a range-bound, positive-theta strategy. Iron condor

12. 12. When is early assignment on a short call most likely?

    Answer: ITM, little time value, before ex-dividend

    Holders exercise to capture the dividend when time value is smaller than it. Early assignment

13. 13. Stock $100, IV 30%, 30 days. Approximate 1-SD expected move?

    Answer: ±$8.60

    100 × 0.30 × √(30/365) ≈ 8.60. Expected move

14. 14. IV rank of 90 means…

    Answer: IV is near its 1-year high

    IV rank places today's IV within its 52-week range. IV rank

15. 15. A long straddle's main risk is…

    Answer: Price staying still while IV falls

    Both legs decay if the stock doesn't move enough. Long straddle