Trading in Future and Options Interview Questions & Answers

  1. Question 1. What Are Crop Reports In Futures And Options Trading Market?

    Answer :

    Crop Reports in Futures and Options Trading Market are Reports compiled by the U.S. Department of Agriculture on various agricultural commodities that are released throughout the year. Information in the reports includes estimates on planted acreage, yield, and expected production, as well as comparison of production from previous years.

  2. Question 2. What Is U.s. Treasury Bond In Futures And Options Trading Market?

    Answer :

    U.S. Treasury Bond in Futures and Options Trading Market is a government-debt security with a coupon and original maturity of more than 10 years. Interest is paid semiannually.

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  4. Question 3. What Is Suspension In Futures And Options Trading Market?

    Answer :

    Suspension in Futures and Options Trading Market is the end of the evening session for specific futures and options markets traded at the Chicago Board of Trade.

  5. Question 4. What Is Bear Spread In A Futures And Options Trading Market?

    Answer :

    Bear Spread in a Futures and Options Trading Market refers to selling the nearby contract month and buying the deferred contract to profit from a change in the price relationship.

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  7. Question 5. What Are The Important Conditions Laid By Sebi For A Derivative Member?

    Answer :

    The derivatives member is required to adhere to the code of conduct specified under the SEBI Broker Sub-Broker regulations.

    The following conditions stipulations have been laid by SEBI on the regulation of sales practices:

    1. Sales Personnel: The derivatives exchange recognizes the persons recommended by the Trading Member and only such persons are authorized to act as sales personnel of the TM. These persons who represent the TM are known as Authorized Persons.
    2. Know-your-client: The member is required to get the Know-your-client form filled by every client.
    3. Risk disclosure document: The derivatives member must educate his client on the risks of derivatives by providing a copy of the Risk disclosure document to the client.
    4. Member-client agreement: The Member is also required to enter into the Member-client agreement with all his clients.
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  9. Question 6. Difference Between Electronic And Electrical?

    Answer :

    Minimum Price Fluctuation in Futures and Options Trading Market is the smallest allowable increment of price movement for a contract.

  10. Question 7. Who Is Holder In Futures And Options Trading Market?

    Answer :

    Holder in Futures and Options Trading Market is the party who purchased an option. Initial Performance Bond The funds required when a futures position (or a short options on futures position) is opened. Sometimes referred to as Initial Margin.

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  12. Question 8. What Is Option Premium In Futures And Options Trading Market?

    Answer :

    Option Premium in Futures and Options Trading Market is the price of an option-the sum of money that the option buyer pays and the option seller receives for the rights granted by the option.

  13. Question 9. What Are The Differences Between Se01, Se09 And Se10?

    Answer :

    Cheapest to Deliver in Futures and Options Trading Market is a method to determine which particular cash debt instrument is most profitable to deliver against a futures contract.

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  15. Question 10. How Many Types Of Tables Exist And What Are They In Data Dictionary?

    Answer :

    COM Membership in Futures and Options Trading Market is a Chicago Board of Trade membership that allows an individual to trade contracts listed in the commodity options market category.

  16. Question 11. What Is The Structure Of Derivatives Markets In India?

    Answer :

    Derivative trading in India takes can place either on a separate and independent Derivative Exchange or on a separate segment of an existing Stock Exchange. Derivative Exchange/Segment function as a Self-Regulatory Organisation (SRO) and SEBI acts as the oversight regulator. The clearing & settlement of all trades on the Derivative Exchange/Segment would have to be through a Clearing Corporation/House, which is independent in governance and membership from the Derivative Exchange/Segment.

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  18. Question 12. What Is Cash Contract In A Futures And Options Trading Market?

    Answer :

    Cash Contract in Futures and Options Trading Market is a sales agreement for either immediate or future delivery of the actual product.

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  20. Question 13. What Is Horizontal Spread In Futures And Options Trading Market?

    Answer :

    Horizontal Spread in Futures and Options Trading Market is the purchase of either a call or put option and the simultaneous sale of the same type of option with typically the same strike price but with a different expiration month.

  21. Question 14. What Is Price Limit In Futures And Options Trading Market?

    Answer :

    Price Limit in Futures and Options Trading Market is the maximum advance or decline-from the previous day’s settlement-permitted for a contract in one trading session by the rules of the exchange.

  22. Question 15. What Is Reciprocal Of European Terms In Futures And Options Trading Market?

    Answer :

    Reciprocal of European Terms in Futures and Options Trading Market is one method of quoting exchange rates, which measured the U.S. dollar value of one foreign currency unit; i.e., U.S. dollars per foreign units.

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  24. Question 16. What Are The Various Types Of Membership In The Derivatives Market?

    Answer :

    The various types of membership in the derivatives market are as follows:

    1. Trading Member (TM) – A TM is a member of the derivatives exchange and can trade on his own behalf and on behalf of his clients.
    2. Clearing Member (CM) -These members are permitted to settle their own trades as well as the trades of the other non-clearing members known as Trading Members who have agreed to settle the trades through them.
    3. Self-clearing Member (SCM) – A SCM are those clearing members who can clear and settle their own trades only.
  25. Question 17. What Is Pulpit In Futures And Options Trading Market?

    Answer :

    Pulpit in Futures and Options Trading Market is a raised structure adjacent to, or in the center of, the pit or ring at a futures exchange where market reporters, employed by the exchange, record price changes as they occur in the trading pit.

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  27. Question 18. What Is Put Option In Futures And Options Trading Market?

    Answer :

    Put Option in Futures and Options Trading Market is an option that gives the option buyer the right but not the obligation to sell or “go short” the underlying futures contracts at the strike price on or before the expiration date.

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  29. Question 19. What Is Federal Fund In Futures And Options Trading Market?

    Answer :

    Federal Fund in Futures and Options Trading Market is the fund that member bank deposits at the Federal Reserve; these funds are loaned by member banks to other member banks.

  30. Question 20. What Is In-the-money Option In Futures And Options Trading Market?

    Answer :

    In-the-Money Option in Futures and Options Trading Market is an option having intrinsic value. A call option is in-the-money if its strike price is below the current price of the underlying futures contract. A put option is in the money if its strike price is above the current price of the underlying futures contract.

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  32. Question 21. What Is Loan Program In Futures And Options Trading Market?

    Answer :

    Loan Program in Futures and Options Trading Market is A federal program in which the government lends money at preannounced rates to farmers and allows them to use the crops they plant for the upcoming crop year as collateral. Default on these loans is the primary method by which the government acquires stock of agricultural commodities.

  33. Question 22. Explain The Functioning Of A Three-way Catalytic Converter?

    Answer :

    Conversion Factor in Futures and Options Trading Market is a factor used to equate the price of T-bond and T-note futures contracts with the various cash T-bonds and T-notes eligible for delivery. This factor is based on the relationship of the cash-instrument coupon to the required 6 percent deliverable grade of a futures contract as well as taking into account the cash instrument’s maturity or call.

  34. Question 23. What Is Deferred (delivery) Month In Futures And Options Trading Market?

    Answer :

    Deferred (Delivery) Month in Futures and Options Trading Market is the more distant month(s) in which futures trading is taking place, as distinguished from the nearby (delivery) month.

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  36. Question 24. What Is Performance Bond Call Program In Futures And Options Trading Market?

    Answer :

    Performance Bond Call in Futures and Options Trading Market is a demand for additional funds because of adverse price movement.

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  38. Question 25. Explain Standard Tables In Sap Internal Tables?

    Answer :

    Wire House in Futures and Options Trading Market is an individual or organization that solicits or accepts orders to buy or sell futures contracts or options on futures and accepts money or other assets from customers to support such orders.

  39. Question 26. What Is Forward (cash) Contract In Futures And Options Trading Market?

    Answer :

    Forward (Cash) Contract in Futures and Options Trading Market is a cash contract in which a seller agrees to deliver a specific cash commodity to a buyer sometime in the future. Forward contracts, in contrast to futures contracts, are privately negotiated and are not standardized.

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  41. Question 27. What Is Futures Contract In Futures And Options Trading Market?

    Answer :

    Futures Contract in Futures and Options Trading Market is a legally binding agreement, made on the trading floor of a futures exchange, to buy or sell a commodity or financial instrument sometime in the future. Futures contracts are standardized according to the quality, quantity, and delivery time and location for each commodity. The only variable is price, which is discovered on an exchange trading floor.

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  43. Question 28. What Is Canceling Order In Futures And Options Trading Market?

    Answer :

    Canceling Order in Futures and Options Trading Market is an order that deletes a customer’s previous order.

  44. Question 29. What Is Stock Index In Futures And Options Trading Market?

    Answer :

    Stock Index in Futures and Options Trading Market is an indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition-the sampling of stocks, the weighting of individual stocks, and the method of averaging used to establish an index.

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  46. Question 30. What Is Maximum Price Fluctuation (futures) In Futures And Options Trading Market?

    Answer :

    Maximum Price Fluctuation (futures) in Futures and Options Trading Market is the maximum amount the contract price can change, up or down, during one trading session, as stipulated by Exchange rules.

  47. Question 31. What Is Position Limit In Futures And Options Trading Market?

    Answer :

    Position Limit in Futures and Options Trading Market is the maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded.

  48. Question 32. What Is Feed Ratio In A Futures And Options Trading Market?

    Answer :

    Feed Ratio in Futures and Options Trading Market is a ratio used to express the relationship of feeding costs to the dollar value of livestock.

  49. Question 33. Who Is Hedger In Futures And Options Trading Market?

    Answer :

    Hedger in Futures and Options Trading Market is an individual or company owning or planning to own a cash commodity-corn, soybeans, wheat, U.S. Treasury bonds, notes, bills, etc.-and concerned that the cost of the commodity may change before either buying or selling it in the cash market. A hedger achieves protection against changing cash prices by purchasing or selling futures contracts of the same or similar commodity and later offsetting that position by selling or purchasing futures contract of the same quantity and type as the initial transaction.

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  51. Question 34. What Are The Advantages And Disadvantages Of Using Gear Pumps?

    Answer :

    Intrinsic Value in Futures and Options Trading Market is the amount by which an option is in-the-money.

  52. Question 35. What Is Position Trading In Futures And Options Trading Market?

    Answer :

    Position Trading in Futures and Options Trading Market is an approach to trading in which the trader either buys or sells contracts and holds them for an extended period of time.

  53. Question 36. How To Declare Select-option As A Parameter?

    Answer :

    Call Option in Futures and Options Trading Market is an option that gives the buyer the right, but not the obligation, to purchase (“go long”) the underlying futures contract at the strike price on or before the expiration date.

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  55. Question 37. What Is Federal Housing Administration (fha) In A Futures And Options Trading Market?

    Answer :

    Federal Housing Administration (FHA) in Futures and Options Trading Market is a division of the U.S. Department of Housing and Urban Development that insures residential mortgage loans and sets construction standards.

  56. Question 38. What Is Loan Rate In Futures And Options Trading Market?

    Answer :

    Loan Rate in Futures and Options Trading Market is the amount lent per unit of a commodity to farmers.