3 lectures in. Check yourself.

Five questions. They check the things lecture 0.1 asked you to know and nothing more. If you get one wrong, its explanation tells you what to read again.

  • Module 00
  • 5 questions

Quiz

Setup: MOCHA50 is a stock index. Its futures and options are settled in cash. One contract = 50 × the index value.

  1. You sell 1 MOCHA50 futures contract at 24,000. On expiry it settles at 24,120. What happens?
  2. You buy 1 MOCHA50 futures contract at 24,000. The contract is worth 24,000 × 50 = ₹12,00,000. Assume the margin is 10%, so ₹1,20,000. The next day the index falls 2%. What happens to your account?
  3. You buy a MOCHA50 call. Strike 24,200, premium ₹80, 20 days to expiry. The index stays at 24,000 for 10 days. Volatility does not change. What has most likely happened to the premium?
  4. You hold the same call: strike 24,200, premium ₹80. At expiry MOCHA50 settles at 24,250. What is your net result?
  5. MOCHA50 is at 24,000. The one-month future trades at 24,090. What happens to the 90-point gap by the close on expiry day?

Terms in this quiz

  • Call optionA call option is the right to buy at the strike before expiry. Strike 24,200 and premium 80 means profit only above…
  • Cost of carryCost of carry is what it costs to hold a position over time: storage, insurance and interest, minus any income. It is…
  • Futures contractA futures contract is an exchange-traded agreement to buy or sell at a set price on a set date, settled daily against…
  • Leverage ratioThe leverage ratio is position value divided by margin: ₹50,000 on ₹10,000 is 5x. One over the ratio is how far the…
  • Lot size and tick sizeLot size is how much one contract covers, like 100 troy ounces for COMEX gold or 1,000 barrels for WTI; tick size is…
  • Options contractAn options contract gives the buyer the right, not the obligation, to buy (call) or sell (put) at a strike before…
  • Perpetual futuresPerpetual futures are contracts that track an asset's price with no expiry date. Expiry is what pulls a normal future…
  • Perpetual premium (basis)The perpetual premium, or basis, is the gap between a perpetual's price and its reference. A positive premium means…
  • Spot price vs futures priceThe spot price is for delivery now; the futures price is for delivery later, and the gap is the cost of carry, which…
  • Strike price and expiryThe strike price is where an option pays; expiry is when a contract ends. Expiry is what ties a future to the real…

Educational content only. Not investment advice.

MochaLearn is a free A to Z course on understanding and trading US stocks and commodities, built for Indian traders.