Question: 1. When do we consider a long Butterfly Spread? A. Expecting a bull market B. Expecting a bear market C. Expecting market to become stable

1.

When do we consider a long Butterfly Spread?

A.

Expecting a bull market
B.

Expecting a bear market
C.

Expecting market to become stable with limited movement

D.

Expecting market to be volatile in either direction

2.

When do we consider a long Straddle?

Expecting market to become stable with limited movement

Expecting market to be volatile in either direction

Expecting a bear market

Expecting a bull market

3.

Which of the following probability determine option prices?

A.

Risk-neutral probability of option price
B.

Real world probability of option price
C.

Real world probability of stock price
D.

None of the above

4.

  1. In option pricing and option hedging, "Delta" is:

    A.

    rate of change of option price with respect to the price of the underlying asset or stock
    B.

    rate of change of option price with respect to the strike price
    C.

    rate of change of stock price with respect to the option price
    D.

    rate of change of option price with respect to maturity

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