Appendix A

Test Your Knowledge

It is always a good idea to test your trading knowledge and skills. One of the reasons this book has been written is to give you a jump-start. Let’s see how much you have learned. There are 50 questions.

1. A binary option contract provides a fixed payout of:

A. $15

B. $100

C. $50

D. $200

2. A binary option trade cannot be traded before its expiration date.

A. True

B. False

3. If a trader was short a binary contract at a bid of $25, what amount did the trader have to put up in his account?

A. $0

B. $25

C. $75

D. $100

4. During the week a trader went long the binary contract. The bid was $15 and the ask was $20. What did he or she pay for the contract (excluding fees)?

A. They paid $10.

B. They paid $100 – $10. ...

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