Question

A _____________ order allows you to sell your stock only if it falls to a certain level.

1. Limit
2. Market
3. Open
4. Stop

If you _____________, you may be forced to sell the underlying asset.

1. Buy a Call
2. Buy a Put
3. Sell a Call
4. Sell a Put

Buying two Puts with the different strike prices is called a ____________

1. Bull
2. Hedge
3. Spread
4. Straddle

Answer 1

The answer is d.Stop

A limit order is executed at the specified price or better.

A market order is executed at the prevailing market price.

An open order remains open unless cancelled

A stop order is executed when the stock reaches the minimum price specified

The answer is c.Sell a Call

Call option is the right to buy an asset at the specified price in future. It is exercisable by the option holder. Hence, if you sell a call, you may be forced to sell the asset

The answer is b. Hegde

Bull involves buying one put and writing another put

Spread is the difference

Straddle is b=buying one put and simultaneously selling another