What is the core assumption behind the Option Pain theory? Option: Option buyers have an advantage on expiry days., Option markets are completely random., Option prices are highly predictable., Option writers consistently outperform option buyers.

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What is the core assumption behind the Option Pain theory?

Option buyers have an advantage on expiry days.

Option markets are completely random.

Option prices are highly predictable.

Option writers consistently outperform option buyers.

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How does the Option Pain theory suggest option writers influence the market?

By spreading misinformation about market trends.

By manipulating option prices on the day of expiry.

By coordinating their trading activities with institutional investors.

By controlling the volume of options traded.

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What is the primary use of the Option Pain theory for traders?

Identifying optimal strikes for option writing.

Predicting long-term market trends.

Calculating the intrinsic value of options.

Timing market entry and exit points.

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Statistically, who has higher odds of winning in a typical option contract?

Option Seller

It depends on the market conditions

Both have equal odds

Option Buyer

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What is the primary motivation for an option writer to sell call options?

They want to hedge against existing long positions.

They need to generate immediate cash flow.

They believe the underlying asset's price will increase.

They believe the underlying asset's price will decrease.

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What is the point of maximum pain in a Put Ratio Back Spread?

When the market experiences high volatility

When the market stays within a range

When the market expires at the lower strike price

When the market expires at the higher strike price