NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism
In the F&O segment of Indian exchanges, what is the term for the price at which an option contract can be exercised by its holder?
The price at which an option holder can buy or sell the underlying on exercise is called the strike price, also known as the exercise price. It is fixed at contract introduction, unlike the premium, which is the option's market price and changes continuously.
- AStrike priceCorrect
- BSettlement price
- CSpot price
- DPremium
Explanation
The strike price (exercise price) is the fixed price at which the underlying can be bought or sold when the option is exercised. Premium is the price paid for the option itself, spot is the current market price of the underlying, and settlement price is used for daily or final settlement of futures.
Did you get it right without looking?
One question tells you little. A timed set on Trading Mechanism shows your real accuracy, how long you take and where you lose marks.
More Trading Mechanism questions
- In the Indian exchange-traded equity derivatives market, which of the following best describes the order type 'Stop Loss' when placed to sel…
- In the Indian equity derivatives market, which of the following is the standard lot-size related rule applied by exchanges when they decide …
- In the F&O segment of Indian exchanges, which of the following best describes the 'lot size' of a derivative contract?
- In the Indian equity derivatives market, which of the following best describes the role of a Trading Member (TM) who is not a clearing membe…
- A trader buys 2 lots of a stock futures contract, lot size 500, at Rs 400. The previous day's settlement price was Rs 396 and the day's clos…
- A trader buys 2 lots of a stock futures contract (lot size 500) at Rs 400. The previous day's settlement price was Rs 396 and the day's clos…