Question 1) I buy the October 65 call in Hutchinson put for a premium of HKD 5.20.

The share price is currently HKD 62.50 Where will I start to make money on this trade ('break-even point') a) HKD 57.30 and higher b) HKD 57.30 and lower c) HKD 59.80 and lower d) HKD 59.80 and higher

Question 2) I buy the October 55 - 60 strangle in HSBC for HKD 5.50 The current share price is HKD 57.50 On this transaction: a) I will earn money if the share price moves 10% until expiry b) I will not earn money if the share price moves 10% until expiry

Question 3) I sell the October 22,000 - 22,200 Call Spread in the Hang Seng Index for HKD 50 a) my maximum profit is 50 if the index expires above 22,200 b) my maximum profit is 50 if the index expires below 22,000 c) my maximum profit is 150 if the index expires below 22,000 d) my maximum profit is 150 if the index expires above 22,200

Question 4) I buy the October 150 call in Hong Kong Exchanges at HKD 5.50 I sell 100 shares at HKD 146 each (the contract size of the option is 100) a) this position is similar to buying the October 150 put at 9.50 b) this position is similar to selling the October 150 put at 9.50 c) this position is similar to buying the October 150 put at 1.50 d) this position is similar to selling the October 150 put at 1.50

Question 5) AMS Transportation (77 HK) trades at HKD 1.80 The interest is 4% per annum Expiry is one year from now The HKD 2.00 call is worth 0.20 The HKD 2.00 put is worth: a) HKD 0.12 b) HKD 0.08 c) HKD 0.28 d) HKD 0.32

Question 6) The HKD 100 straddle in Cheung Kong (1) trades at HKD 14.00 The share price is HKD 103 Interest rate 4% Maturity 0.5 years Dividend: HKD 1.00 a) Call is worth HKD 8.00, Put is worth HKD 6.00 b) Call is worth HKD 8.50, Put is worth HKD 5.50 c) Call is worth HKD 9.00, Put is worth HKD 5.00 d) none of the above

Question 7) I buy the 1-year, HKD 200 call at HKD 9.00 I sell the 1-year, HKD 200 put at HKD 5.00 I sell shares at HKD 201 Interest is 2% per year a) if there is no dividend, I loose money on this trade b) if there is a dividend of HKD 1.00, break even on this trade c) if there is a dividend of HKD 2.00, I earn money on this trade

Question 8) Which of the statements is INCORRECT a) when calculating the future, we use the interest over the current spot b) when calculating the synthetic, we use the interest rate over the strike c) when in a long synthetic (+C, -P, -stock) a dividend increase would hurt us d) the only risks in a synthetic position (+C, -P, -stock) are interest rate risk and dividend risk

Question 9) Which of the following statements is CORRECT a) the future can trade below the strike only if there is a dividend b) when the dividend exceeds the interest amount, a put of any given strike is worth more than the call of that strike c) when the future trades below the spot, there must be a dividend priced in d) when the future trades above the spot, there cannot be a dividend

Question 10) I am short the October HKD 90 put (delta -45) with the shares trading at HKD 95. After delta-hedging I go to sleep for 2 weeks. After waking up, the share price is still at HKD 95 a) My delta position is flat b) My delta position is long c) My delta position is short

Question 11) With the share price at HKD 105, I have the following position: - Long October 110 put - Short December 110 put In order to delta-hedge, I need to: a) Buy Shares b) Sell Shares c) Do nothing, I am already delta flat

Question 12) I have a mystery position that has the following characteristics - Gamma Short - Delta Long The share price is HKD 95, so my position is: a) Long Call HKD 100, Short Put HKD 100 b) Long Call HKD 100, Long Put HKD 100 c) Short Call HKD 100, Short Put HKD 100 d) Short Call HKD 100, Long Put HKD 100

Question 13) With a share trading at HKD 100, I am long 4 Gamma. Which of the following delta-hedge regimes would you prefer? a) Up HKD 3 b) Up HKD 2, down HKD 2 c) Up HKD 1.50, down HKD 1.50, up HKD 1.50

Question 14) I Sell the Oct 100 Call for HKD 4.00 (Contract size 100) I buy 40 shares at HKD 98 My break-even points at expiry are? a) b) c) d) Only 104 108 and 92 108 and 88 104 and 88

Question 15) I buy the Oct 100 Straddle for HKD 10.00 I buy 20 shares at HKD 98 My break-even points at expiry are? a) 90 and 110 b) 88 and 108 c) 90 and 108 d) 88 and 110

Question 16) I have a position with the following characteristics (Share price is 60) - I am delta flat - I am gamma long - I pay theta What is my position a) b) c) d) Long October 60 put, short November 60 call Short October 60 call, Short November 60 put Long October 60 call, Short November 60 call Long November 60 call, Long October 60 call