Derivatives Trader Interview Questions and Answers for Freshers

Options strategies like strangle and ratio involve buying or selling multiple options to profit from market movements.

• Strangle involves buying both a call and put option with different strike prices but the same expiration date.

• Ratio involves buying or selling a different number of options to create a specific risk/reward profile.

• Both strategies can be used to profit from volatility in the underlying asset.

• Strangle can be used when expecting a significant price movement but u...read more

Call and put options are financial contracts that give the holder the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a specified price within a specified time period.

• Call option: gives the holder the right to buy the underlying asset at a specified price within a specified time period.

• Put option: gives the holder the right to sell the underlying asset at a specified price within a specified time period.

• Options are commonly used in financial ...read more