Options strategies and securities regulation concepts tested on the Series 7 exam, distinct from the core terminology deck.
45 cards · basic cards · AI-written, checked twice. Edit anything.
- What is the maximum loss on a long call option?
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The premium paid- What is the maximum gain on a long call option?
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Unlimited, since the stock price can rise indefinitely- How do you calculate the breakeven point on a long call?
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Strike price plus premium paid- What is the maximum gain on a long put option?
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Strike price minus premium paid, achieved if the stock falls to zero- How do you calculate the breakeven point on a long put?
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Strike price minus premium paid- What is the maximum loss on an uncovered (naked) short call?
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Unlimited- What is the maximum gain on a short call?
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The premium received- What is the maximum loss on a short put?
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Strike price minus premium received- What is the maximum gain on a short put?
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The premium received- What is the main purpose of writing a covered call?
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To generate income on stock already owned, in exchange for capping the stock's upside- How do you calculate the maximum gain on a covered call?
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Strike price minus stock purchase price, plus premium received- How do you calculate the breakeven point on a covered call?
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Stock purchase price minus premium received- What is the main purpose of a protective put?
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To hedge a long stock position against a decline in price- How do you calculate the breakeven point on a protective put?
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Stock purchase price plus premium paid- A long straddle profits when the underlying stock makes ____.
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a large price move in either direction
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