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Binary Options Quiz

31 May, 2014 by
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QuizTests are the only true way to check to see if knowledge has been acquired satisfactorily. The following quiz is designed to test your knowledge of binary options.

The answers will be provided in another article next week.

  1. A US-style binary option usually provides a fixed payout of:
    1. $15
    2. $100
    3. $50
    4. $200
  2. Which of the following situations will confirm a bullish trade direction?
    1. A flag forms in the midst of an uptrend.
    2. A descending triangle has been detected.
    3. The price action forms a rising wedge pattern.
  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?
    1. $0
    2. $25
    3. $75
    4. $100
  4. Carla opens her platform to see that the Dow Jones Industrial Average is hitting new highs. She decides to open a binary contract on a particular asset. Which underlying market is she trading?
    1. DJIA NYSE
    2. Wall Street 30
    3. CBOT E-mini Dow Futures
  5. The Federal Reserve Board is scheduled to release a decision on interest rates at 2 p.m. Bob wants to put on a trade to play a big move. Which of the following binary contracts will react the least to the announcement?
    1. U.S. 500
    2. USD/CHF
    3. USD/JPY
    4. EUR/USD
  6. If a trader was long a binary contract and the price settled at the binary strike price, what would the payout for the contract be?
    1. $0
    2. $45
    3. $60
    4. $100
  7. During the week a trader went long on a binary contract. The bid was $20 and the ask was $25. What kind of strategy was he employing?
    1. At-the-money
    2. In-the-money
    3. Deep-in-the-money
    4. Deep-out-of-the-money
  8. A trader buys a binary option contract at strike price 1.45 and wants to put a stop position on the binary contract. Which of the following orders should he use as a stop order?
    1. Sell stop at 1.40.
    2. Sell to close 1.40.
    3. None of the above.
  9. When is the ADP Employment Change report released to the public?
    1. First Friday of the month.
    2. Second Friday of the month.
    3. First Wednesday of the month.
    4. Second Wednesday of the month.
  10. The economic calendar is listing a key speech by the only female heading the central bank which issues a major currency. Which currency pair is most likely to be affected?
    1. British Pound/Japanese Yen
    2. US Dollar/Canadian Dollar
    3. European Central Bank
    4. Aussie/Yen
  11. The binary option contract on the Aussie dollar has as its underlying market which of the following:
    1. AUD/USD CME futures contract.
    2. ASX200.
    3. Bovespa
    4. MSM30
  12. A trader completes 10 binary trades with one lot on each trade. The result is four winners. What needs to be the average loss of each trade to break even?
    1. $30
    2. $40
    3. $22
    4. $43
  13. The trader sees the spot market for a currency pair at 1.4650 on Monday morning. He believes the trend is going down. The Nadex binary option strike that would be cheapest to sell is:
    1. 1.4500
    2. 1.4550
    3. 1.4600
    4. 1.5750
  14. The trader observes a sideways channel in an underlying market. He believes that the price action will feature a breakout of the channel. Which of the current strategies could be used?
    1. Choose a binary contract with a strike price outside the support.
    2. Choose a binary contract with a strike price outside the resistance.
    3. Choose a binary contract with the strike price in the middle.
  15. If a price is in a steady sideways action, which pattern best describes this?

    1. Equilateral triangle
    2. Channel pattern
    3. Parabolic curve
    4. Descending triangle
  16. Which price action is not associated with the pattern?
    1. Channel Pattern—Breakout Trade
    2. Equilateral Triangle—Breakout Trade
    3. Parabolic Curve—Retracement
  17. An at-the-money binary option is at $55. It means that it will likely settle at $100 if it is less than two hours from expiration. Do you agree?
    1. Yes
    2. No
  18. The trader is interested in a crude oil trade at a time that the Libyan Civil War has just come to an end. The spot price is $103.2. Which strike price should he look at?
    1. WTI crude oil 104.5
    2. Nymex crude oil 101.00
    3. Brent crude oil 104.5
    4. WTI crude oil 101.00
  19. A trader wants to trade the binary options mirroring the Australian economy. He is not interested in trading the AUD/USD, and instead decides to trade on copper. This represents a viable alternative.
    1. True
    2. False
    3. Can’t tell from the information.
  20. The news comes out and the price of crude oil starts to surge. Ricky is afraid of trading oil binaries because of the high volatility and therefore decides to trade another asset to capture this move. Which other asset can he trade that best captures this move?

    1. S&P 500
    2. AUD/USD
    3. USD/CAD
    4. EUR/USD
  21. The trader has a bearish bias on the U.S. dollar and intends to enter a put on a contract that plays out this bias. Which of the following trade orders is a reflection of a bearish dollar bias?
    1. Short USD/CAD.
    2. Long GBP/USD.
    3. Short USD/JPY.
    4. Long EUR/USD.
  22. The trader is bullish on copper but does not find this asset on his online binary platform. What asset can he trade to mirror the copper movements?
    1. USD/CHF
    2. USD/CAD
    3. AUD/USD
    4. U.S. 500
  23. A trader is short a binary contract; the Bid is $33 and the Ask is $38. They put on a short position of one contract. They want to get out with a profit of 50 percent. What trading price should the ask position be to achieve this result?
    1. $67
    2. $19
    3. $83.5
    4. $15
  24. A trader draws weekly support and resistance levels to determine which binary strike price to choose. They want to go long the position and notices that the price of binary they are interested in is just above the 61.8 percent weekly Fib line. As a result, he chooses the binary contract that is below the 61.8 percent Fib line to improve the technical conditions to achieve their results. Do you agree with this decision?
    1. Yes
    2. No
  25. Mark wants to trade the non-farm payroll. Which asset is considered the best to trade on this news event?
    1. US Tech 500
    2. USD/JPY
    3. USD/CAD
    4. AUD/USD
  26. If a trader wants to trade the Indian stock market, which of the underlying contracts should he choose?
    1. Liffe FTSE 100 Index Futures
    2. SGX Nifty Index Futures
    3. Kospi 200 Index Futures
    4. SGX Nikkei Futures
  27. A trader went long a binary contract and the price settled right at the binary strike price. What was the settlement value?
    1. $0
    2. $100
    3. $50
    4. $25
  28. The trader wants to trade the NFP. The employment change is less than expected while the unemployment rate is lower than expected. At the same time, the Canadian employment change shows a better than expected number with a static unemployment rate. What should be the trader’s trade call?
    1. Short USD/CAD
    2. Short USD/JPY
    3. Long USD/CAD
    4. No trade.
  29. Mark has a trading performance where he has a 50 percent win record for the past 20 trades and an average profit of $50 per win. His losses average $80. How profitable is he?
    1. $500
    2. $300
    3. $250
    4. $0
  30. An in-the-money binary option strike price will always be trading at a price higher than an at-the-money strike price. Is this statement correct?
    1. True
    2. False

Conclusion

Answers to these questions will be posted on our blog next week, so stay tuned!

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