Unit ko samjho · NISM Series V-D
Strategies Using Equity Futures and Equity Options
9 questions is unit mein
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Is unit mein kya hai
- An investor owns a share and wants to retain its upside while obtaining an expiry floor on its selling value. The investor is willing to pay an option premium. Which basic strategy most directly fits this objective?
- An investor buys a share for ₹100 and writes a call on that share with strike ₹110, receiving ₹4 premium. The investor holds the share and keeps the call position open until the option expires. Ignoring dividends and charges, what is the maximum net profit per share? Assumptions: Both legs cover the same share quantity and are evaluated at the option expiry. Dividends and charges are ignored.
- A trader buys a call with strike ₹100 for ₹8 and sells a call with strike ₹110 for ₹3. Both have the same underlying, quantity and expiry. Ignoring costs, what is the maximum net profit per underlying unit? Assumptions: The legs have matching underlying, quantity and expiry. Fees are excluded.
- A trader buys a call and a put with the same strike of ₹100 and the same expiry. The call costs ₹7 and the put ₹5 per unit. Ignoring fees, what are the two underlying prices at expiry where the combined position breaks even? Assumptions: Both options have the same underlying, strike, quantity and expiry. Costs are ignored.
- For European options on a non-dividend-paying share, use C + PV(K) = P + S. The share is ₹100, a put with the chosen strike and expiry costs ₹4, and the present value of that strike is ₹96. What call value satisfies the supplied parity relation? Assumptions: Use European options, the same strike and expiry, no dividends, and the parity relation given in the stem.
- An investor buys a European call and sells a European put with the same strike K, underlying quantity and expiry. Before deducting the initial net premium, what is the combined payoff per unit at expiry Sₜ? Assumptions: Both European options share the same strike, underlying, quantity and expiry. The question asks payoff before initial net premium.
- A desk holds 10 long call contracts, each covering a hypothetical 100 shares. Each call has delta +0.60 per underlying share. Assuming a share’s delta is +1, which stock position makes the initial combined delta approximately zero? Assumptions: The contract multiplier is hypothetical. Use the given initial deltas and ignore costs.
- An analyst defines an open-interest put-call ratio as total put open interest divided by total call open interest. Put open interest is 1,80,000 contracts and call open interest is 1,20,000 contracts. Which statement is correct? Assumptions: Use open interest, not traded volume, and the put-over-call definition supplied.
- A hypothetical futures contract starts with open interest of 300 contracts. During a session: 100 trades pair a new long with a new short. 40 trades pair an existing long closing with an existing short closing. And 60 trades pair one opening side with one closing side. Each trade is for one contract. Count a matched contract once. What are ending open interest and session volume? Assumptions: Each matched trade is one contract and is counted once. The opening/closing classifications are given.
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Practice bank se · 1
An investor owns a share and wants to retain its upside while obtaining an expiry floor on its selling value. The investor is willing to pay an option premium. Which basic strategy most directly fits this objective?
A protective put combines the owned share with a put on the same quantity. At expiry the put can establish a floor before accounting for the premium, while gains above the strike remain available from the share. Remember: Protection has a cost, which must be included in the strategy’s overall result.
Hint A put gives its buyer a right to sell at a strike.
V-D-112Practice bank se · 2
An investor buys a share for ₹100 and writes a call on that share with strike ₹110, receiving ₹4 premium. The investor holds the share and keeps the call position open until the option expires. Ignoring dividends and charges, what is the maximum net profit per share? Assumptions: Both legs cover the same share quantity and are evaluated at the option expiry. Dividends and charges are ignored.
The share gain retained up to the strike is ₹110 − ₹100 = ₹10. Adding the ₹4 premium gives a maximum net profit of ₹14. Above ₹110 the written call offsets further share gains. Remember: A covered call exchanges some upside participation for premium income.
Hint At or above the strike, combine the capped share gain with premium received.
V-D-113Practice bank se · 3
A trader buys a call with strike ₹100 for ₹8 and sells a call with strike ₹110 for ₹3. Both have the same underlying, quantity and expiry. Ignoring costs, what is the maximum net profit per underlying unit? Assumptions: The legs have matching underlying, quantity and expiry. Fees are excluded.
The net premium paid is ₹8 − ₹3 = ₹5. The maximum expiry payoff is the ₹10 strike width, so maximum net profit is ₹10 − ₹5 = ₹5. Remember: A debit spread’s maximum profit is its capped payoff less its initial net cost.
Hint Subtract the net debit from the strike width.
V-D-114Practice bank se · 4
A trader buys a call and a put with the same strike of ₹100 and the same expiry. The call costs ₹7 and the put ₹5 per unit. Ignoring fees, what are the two underlying prices at expiry where the combined position breaks even? Assumptions: Both options have the same underlying, strike, quantity and expiry. Costs are ignored.
Total premium is ₹7 + ₹5 = ₹12. At expiry the combined payoff is the absolute movement from ₹100, so prices are ₹100 − ₹12 = ₹88 and ₹100 + ₹12 = ₹112. Remember: Buying volatility through a straddle requires a large enough move to recover its total cost.
Hint The movement away from the common strike must recover both premiums.
V-D-115Practice bank se · 5
For European options on a non-dividend-paying share, use C + PV(K) = P + S. The share is ₹100, a put with the chosen strike and expiry costs ₹4, and the present value of that strike is ₹96. What call value satisfies the supplied parity relation? Assumptions: Use European options, the same strike and expiry, no dividends, and the parity relation given in the stem.
The parity call value is ₹4 + ₹100 − ₹96 = ₹8. Matching strike, expiry and exercise style are essential to the stated relation. Remember: Put-call parity compares contracts with consistent terms and cash-flow dates.
Hint Rearrange to C = P + S − PV(K).
V-D-116Practice bank se · 6
An investor buys a European call and sells a European put with the same strike K, underlying quantity and expiry. Before deducting the initial net premium, what is the combined payoff per unit at expiry Sₜ? Assumptions: Both European options share the same strike, underlying, quantity and expiry. The question asks payoff before initial net premium.
Above K, the call pays Sₜ − K and the put expires with zero value. Below K, the short put pays −(K − Sₜ), again equal to Sₜ − K. Initial option cash flows must be included separately when calculating total profit. Remember: Identical terminal payoffs do not justify ignoring initial cash flows.
Hint Check separately the outcomes above and below the common strike.
V-D-117Practice bank se · 7
A desk holds 10 long call contracts, each covering a hypothetical 100 shares. Each call has delta +0.60 per underlying share. Assuming a share’s delta is +1, which stock position makes the initial combined delta approximately zero? Assumptions: The contract multiplier is hypothetical. Use the given initial deltas and ignore costs.
The calls have total 10 × 100 × 0.60 = +600 shares. Shorting 600 shares adds −600 delta. The hedge may need rebalancing as option delta changes. Remember: A delta hedge is a local sensitivity hedge, not permanent elimination of all option risks.
Hint Convert the option position into equivalent shares of delta exposure.
V-D-118Practice bank se · 8
An analyst defines an open-interest put-call ratio as total put open interest divided by total call open interest. Put open interest is 1,80,000 contracts and call open interest is 1,20,000 contracts. Which statement is correct? Assumptions: Use open interest, not traded volume, and the put-over-call definition supplied.
The ratio is 1,80,000 ÷ 1,20,000 = 1.50. reflects outstanding positions whose motives may differ, so this statistic alone cannot establish a certain future price move. Remember: Market-positioning indicators need context and do not provide guarantees.
Hint Calculate the defined ratio, then separate measurement from prediction.
V-D-119Practice bank se · 9
A hypothetical futures contract starts with open interest of 300 contracts. During a session: 100 trades pair a new long with a new short. 40 trades pair an existing long closing with an existing short closing. And 60 trades pair one opening side with one closing side. Each trade is for one contract. Count a matched contract once. What are ending open interest and session volume? Assumptions: Each matched trade is one contract and is counted once. The opening/closing classifications are given.
Ending open interest is 300 + 100 − 40 + 0 = 360 contracts. Volume counts all matched trades, 100 + 40 + 60 = 200 contracts, regardless of whether they create, transfer or close positions. Remember: Open interest is an outstanding stock of contracts. Volume is trading activity over a period.
Hint Both opening adds open interest. Both closing reduces it. An opening–closing transfer leaves it unchanged.
V-D-120Breakeven is the point at which a defined result is exactly zero.
Aage padhoDelta is the rate at which an option's premium changes for a one-unit change in the underlying.
Aage padhoOpen Interest (OI) is the number of futures or options contracts in the NSE F&O segment that are still open.
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