Derivative Theory Question Bank
1. Write a short note on Intrinsic value and Time Value in an option Premium. .
2. Write a short note on Options writing.
3. Discuss in detail the features of Futures contract.
4. What is moneyness of the option. Explain with suitable example.
5. Write a Short note on types of margin charged while trading in Futures contract.
6. What are Greeks in option Pricing?
7. Distinguish between European options and American options.
8. Write a short note on Indian Derivative markets.
9. Explain Straddle and Strangle option strategy with Pay off Chart.
10. What is covered Call and protective Put. Explain with the help of proper diagram.
11. Explain the major limitation od forward markets.
12. Explain in details the various terminologies used in Options Trading.
13. Distinguish between futures and options.
14. Write a short note on Black Scholes model.
15. Discuss about vertical bullish spread using call in details with suitable example and
diagram.
16. Discuss about vertical bearish spread using put in details with suitable example and
diagram.
17. What is Delta Hedging? Explain with suitable example.
18. What is Put Call Ratio? Discuss the utility of PCR in trading.
Additional practical question
1. How would you hedge your portfolio worth Rs 75,00,000/- using index futures
if the delta of your portfolio is 0.65 and Index is currently trading at 24,150 and lot size
25?
2. Mr. B is long on Nifty Futures at Rs 21550, lot size 50. Calculate his MTM if spot is
currently trading at 21650.
3. Mrs Rita took a short position in 5lots of Bank Nifty PUT with strike Price 48200 at Rs
150. If the Lot size is 15, and Bank Nifty expired at 48250. Calculate her Profit of Loss in
the contract.
4. Mr. H bought 5 lots of Call option of Tata Motors of Strike 780 paying a premium of Rs
25 per share. Consider lot size as 1500. Calculate Profit/loss if the contract settlement price
is 782.
5. You bought 10 lots of PUT option at premium of Rs. 45 and sold it for 68 on the same day.
Calculate your Profit if the lot size of the contract was 800.
6. Ms Rajni is short 5Lots on Nifty futures at Rs 21,810 when spot price was 21750. If the
basis of Futures contract declines by 30 points. What will be her profit/loss if Nifty spot is
at 21680.
7. WIZ fin ltd is Short in 50 lots of Nifty in call option with strike 21700 at the premium of
Rs 65 per lot and also short in 25 lots of Nifty Put 21700 with premium of Rs 54 per lot. If
nifty expires at 21680. Calculate the Net Profit or Loss from the strategy.
8. Mr. Kiran is long on Nifty Futures at Rs 20950, lot size 50. Calculate his MTM if spot is
currently trading at 21250.
