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?
- The premium paid
- What is the maximum gain on a long call option?
- Unlimited, since the stock price can rise indefinitely
- How do you calculate the breakeven point on a long call?
- Strike price plus premium paid
- What is the maximum gain on a long put option?
- Strike price minus premium paid, achieved if the stock falls to zero
- How do you calculate the breakeven point on a long put?
- Strike price minus premium paid
- What is the maximum loss on an uncovered (naked) short call?
- Unlimited
- What is the maximum gain on a short call?
- The premium received
- What is the maximum loss on a short put?
- Strike price minus premium received
- What is the maximum gain on a short put?
- The premium received
- What is the main purpose of writing a covered call?
- 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?
- Strike price minus stock purchase price, plus premium received
- How do you calculate the breakeven point on a covered call?
- Stock purchase price minus premium received
- What is the main purpose of a protective put?
- To hedge a long stock position against a decline in price
- How do you calculate the breakeven point on a protective put?
- Stock purchase price plus premium paid
- A long straddle profits when the underlying stock makes ____.
- a large price move in either direction