Investors are convinced that, next year, the price of a stock will either go up or down; they disagree on the volatility of the price. The current spot price is $70.00 and volatility will either be high or low. If volatility is high, the price will either increase or decrease by $20.75. If volatility is low, the price will either increase or decrease by $5.00. If the increase or decrease in the price can occur with equal probability, how much more is an at-the-money put expected to (gross) payoff when volatility is high rather than low?

A trader creates a bear spread by buying a put option with a strike price of $100 for a price of $11 and selling a put option with a strike price of $90 for a price of $9. What is the maximum loss from this bear spread?

The spot price of Google stock is currently $2,855. Which of the following options are in-the-money? $2,500-strike call $3,000-strike put $2,000-strike call $3,500-strike put $2,000-strike put

Which of the following is bearish on price and bearish on volatility?

Given the following stock prices over six consecutive days: Day 1: $150 Day 2: $155 Day 3: $152 Day 4: $160 Day 5: $165 Day 6: $170 Calculate the population deviation of the log-returns of the stock prices.  (Recall, option traders assume 252 daily in a year.)

The spot price of Google stock is currently $2,855. Which of the following options are in-the-money? $2,000-strike call $2,500-strike put $3,000-strike call $2,000-strike put $3,500-strike call

What do the upward slope and linearity of the payoff diagram indicate about an investor who has a long forward position?

A trader sells a call option with a strike price of $70. The premium received for the option is $6. If the stock price at expiration is $80, what is the net payoff?

Challenge Which of the following have negative deltas? (Make sure to choose ALL that are correct.)

Challenge Which of the following have positive deltas? (Make sure to choose ALL that are correct.)