Multiple Choices: 1. What happens to a premium for a call option if the underlying futures price increases (all else equal)? (i) The premium increases. (ii) The premiums stays the same. (iii) The premium decreases. (iv) There is no relationship between the premium and futures prices. 2. What happens to a premium for a put option if volatility in the underlying futures contract decreases (all else equal)? (i) The premium increases. (ii) The premiums stays the same. (iii) The premium decreases. (iv) There is no relationship between the premium and volatility. 3. Which of the following is false about the seller an option? (i) The seller is required to have a margin account (ii) The seller has an obligation, not a right (iii) The seller always wants the futures price to rise (iv) The seller can choose to offset the option
Multiple Choices:
1. What happens to a premium for a call option if the underlying futures price increases (all else equal)?
(i) The premium increases.
(ii) The premiums stays the same.
(iii) The premium decreases.
(iv) There is no relationship between the premium and futures prices.
2. What happens to a premium for a put option if volatility in the underlying futures contract decreases (all else equal)?
(i) The premium increases.
(ii) The premiums stays the same.
(iii) The premium decreases.
(iv) There is no relationship between the premium and volatility.
3. Which of the following is false about the seller an option?
(i) The seller is required to have a margin account
(ii) The seller has an obligation, not a right
(iii) The seller always wants the futures price to rise
(iv) The seller can choose to offset the option
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