| Do you know your Greeks? Posted: 08 Oct 2011 07:07 AM PDT Today I am going to give a quiz on the most important Greek, Deltas. Understanding and managing this important Greek is crucial to your options trading. Mid next week I will go over the quiz and go over each answer in detail. Please do this quiz without any books or software if you can. - Delta refers to
- time risk
- price risk
- volatility risk
- When you buy a call option, the delta decreases as the stock price goes up? True or False?
- The delta of a January at-the –money call is higher than a November at-the-money call? True or False?
- You buy the November 175-180 call debit spread for $3.00. The delta of the 175's is 63 and the delta for the 180's is 53. Approximately, what will be the price of the spread if the stocks goes up $1.00?
- Does an increase in implied volatility affect a 50 delta or 75 delta option more?
- What is the delta of 100 shares of stock?
- What greek determines how deltas will change over time?
- Do at-the-money deltas increase or decrease as you get closer to expiration? How about out-of-the money options?
- Will the deltas of an at-the-money calendar increase or decrease as you get closer to expiation?
- Why are the position deltas of an Iron Butterfly always short when you start?
Good luck!  |
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