Free Sample Question
Q1MCQMediumShort Straddle
A short straddle position has which risk-return profile?
✓Limited profit (capped at premiums received), unlimited loss if the underlying moves sharply in either direction
BUnlimited profit, limited loss
CBoth profit and loss are always zero
DLimited profit and limited loss, like a spread
💡 A short straddle (selling both a call and put at the same strike) is a limited-profit, unlimited-loss strategy — profitable if the underlying stays near the strike, but exposed to substantial losses if the market moves significantly in either direction. It should be undertaken with significant care.
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About this content: These practice questions are based on the
NISM-Series-VD: Mutual Fund - Specialised Investment Fund Distributors Certification Examination Workbook
published by the National Institute of Securities Markets (NISM), Mumbai (March 2026 edition).
NISM is a SEBI-established institution. Questions cover Chapter 17: Strategies using Equity Futures and Equity Options with verified answers and explanations.
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