Hi @LauraFrawley,
I don't really have a solution, but I may be able to point out a reason why Instructure has the options set up the way they do... I believe the wrong answer penalty is there to prevent students from just checking every available option. Unfortunately without the penalty, students would likely figure out that they would receive full credit for selecting every option available, even the wrong ones. I guess another option would be to only let students select the right number of options, but that gets very problematic for coding and user experience, plus many instructors don't want students to know the number of answers they should select. More options are usually nice, but I also know there are some practical limits as to how many grading options Instructure can provide and maintain... This is definitely a tough one...
With all that being said, if you would like Instructure to consider this idea in some form or another for a future enhancement, I'd encourage you to make a post in the Ideas area of the community.
Hope this helps at least a bit, even if it's not the answer you may have been hoping to receive.
-Chris