Stock vs Options Quiz 📊 | Learn the Key Differences Between Stocks and Options

Question 1

Which statement best describes STOCK ownership versus OPTIONS?

Accepted Answer

Owning stock gives equity ownership; owning an option gives a contractual right, not ownership.

Question 2

Do common STOCKS typically grant voting rights and dividends?

Accepted Answer

Yes, often voting rights and potential dividends.

Question 3

Do OPTIONS pay dividends?

Accepted Answer

No — options do not pay dividends.

Question 4

Which has TIME DECAY (Theta) risk?

Accepted Answer

Options.

Question 5

Capital requirement: which is typically more CAPITAL EFFICIENT for directional exposure?

Accepted Answer

Buying options (e.g., calls) can be more capital efficient.

Question 6

Maximum loss when BUYING STOCK versus BUYING A CALL?

Accepted Answer

Stock: limited to zero; Call: limited to premium.

Question 7

Which position has THEORETICALLY UNLIMITED LOSS?

Accepted Answer

Shorting a call (naked).

Question 8

Assignment risk applies to which instrument?

Accepted Answer

Options only (for short option sellers).

Question 9

Which typically offers DIRECT income from DIVIDENDS?

Accepted Answer

Stocks.

Question 10

Which is true about LIQUIDITY and BID/ASK spreads?

Accepted Answer

Options often have wider spreads than highly liquid stocks.

Question 11

Which reflects EXPIRATION risk?

Accepted Answer

Options expire on a specific date; stocks do not expire.

Question 12

How do CORPORATE ACTIONS (splits, dividends) affect stocks vs options?

Accepted Answer

They can adjust option contracts (strikes/multipliers) and directly impact stockholders.

Question 13

Which is generally better for PURE HEDGING of a stock portfolio?

Accepted Answer

Buying puts on the index/stock.

Question 14

Which is more sensitive to IMPLIED VOLATILITY changes?

Accepted Answer

Options.

Question 15

Can you generate income from OPTIONS without owning stock?

Accepted Answer

Yes — by selling options (e.g., cash-secured puts, credit spreads).

Question 16

Which has SIMPLE linear payoff with NO expiration?

Accepted Answer

Stock.

Question 17

Break-even comparison: BUYING STOCK at $50 vs BUYING A CALL for $3 at strike $50.

Accepted Answer

Stock BE = $50; Call BE = $53.

Question 18

MARGIN use: which generally REQUIRES MARGIN as COLLATERAL?

Accepted Answer

Selling naked options.

Question 19

Which best describes RISK of TOTAL CAPITAL LOSS?

Accepted Answer

Long options can lose 100% of premium faster due to expiration/time decay.

Question 20

Which is typically BEST for LEVERAGED directional bets with LIMITED defined loss?

Accepted Answer

Long options (e.g., calls or debit spreads).

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