Log in Sign up. How can we help? What is your email? Upgrade to remove ads. An option contract for RFQ is for shares. This would most likely be a result of which of the following circumstances? If there had been a stock dividend.

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All of the following are true of covered call option writing, EXCEPT: The writer can increase the overall yield on his portfolio It is considered a conservative option strategy The premium received guarantees the writer cannot have a loss on the underlying security The writer will have a short-term capital gain if the option expires unexercised.

The premium received guarantees the writer cannot have a loss on the underlying security. If exercised, settlement is in cash the next day.

The settlement amount is based on the closing index price on the day of exercise. I only I and II only II and III only I, II, and III. The settlement amount is determined by the difference in strike price and the closing value of the index on the day of exercise. Index options have monthly expirations. An investor buys a DEF April 35 put at 3 and simultaneously writes a DEF April 30 put at 1. The maximum that the investor could lose on this position is: When opening an options account for a client, in what order should the following be accomplished?

The first step in opening an options account is to obtain financial information from the customer to determine suitability. The account must then be approved for options trading by an ROP registered options principal. After approval, a transaction may be executed.

A signed option agreement must be obtained within 15 days of the approval of the account. A writer of an "uncovered" call option would profit if the: Underlying common stock goes up Underlying common stock goes down Call expires Position is closed out I only I and II only II and III only II and IV only.

A writer or seller of an uncovered call option does not own the underlying stock. If the underlying stock goes down, the call will not be exercised. If the call option expires, the writer would keep the premium paid by the buyer of the option and would no longer be exposed to a possible loss if the stock went up. Remember that a closing transaction may or may not result in a profit. If an investor wrote one OEX March put option and the option was exercised when the index was The exercise price of the put option is and the lower index value is All of the following trades can be executed in a cash account, EXCEPT the sale of a n: Common stock Preferred stock Covered call option Uncovered call option.

If the option is exercised, the writer must buy stock at an unknown market price. The sale of uncovered options can only be executed in a margin account.

An investor purchases a BAT Sept 30 put 2 and also writes a BAT Sept 40 put 8. The investor will profit if: The spread widens to more than 6 The spread narrows to less than 6 Both options expire Both options are exercised I or III I or IV II or III II or IV.

The position described is a spread. The investor received more 8 for the put that he sold than he paid 2 for the put that he purchased. The spread is therefore a credit spread and the investor wants the spread to narrow. If both options expire, the investor gets to keep the 6 points of net premium and would have a profit.

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A company in France will be importing California wines. The company must pay in U. To provide protection in the event that the U.

France is one of the countries that has agreed to use the euro as its currency. The company should therefore buy puts on the euro.

The company could not buy U. If the fear was that the U. A registered representative writes a letter to see if his clients have any interest in trading options. The letter is generic and describes the advantages and disadvantages of options trading.

Must be approved prior to use by a ROP Need not be approved prior to use so long as it does not contain recommendations Must be accompanied by a risk disclosure document Need not be accompanied by a risk disclosure document I and III only I and IV only II and III only II and IV only.

All advertising, sales literature and educational material must be approved by a ROP prior to being sent to a customer. Since there are no specific recommendations, the OCC disclosure document does not need to precede or accompany the letter. However, the customer must receive the risk disclosure document at or before the account is approved for options trading. Listed equity options stop trading at: Eastern Time on the business day before the expiration date of the option 3: Eastern Time on the business day before the expiration date of the option 4: Eastern Time on the business day before the expiration date of the option.

Listed equity options stop trading at 3: Eastern Time on the business day prior to the expiration date of the option. Trading ceases on the third Friday of the expiration month. The expiration date is on the Saturday immediately following the third Friday of the expiration month. When looking at a newspaper listing for foreign currency options, the spot prices for the underlying foreign currencies are quoted in: For foreign currency options, spot prices are quoted in U.

An investor purchases a Canadian dollar September 80 call and writes a Canadian dollar September 82 call. This position is a: Bullish spread Bearish spread Long straddle Credit combination A call option would be considered "covered" if it was written against all of the following, EXCEPT: The underlying common stock held in a cash account The underlying common stock held in a bank The underlying common stock held in a trust company The convertible bonds or convertible preferred stock of another corporation Explanation: The option would be considered "covered" if written against all of the choices listed except the convertible preferred stock or convertible bonds of another corporation.

A security that is convertible into common stock is acceptable, but it must be of the same corporation and be immediately convertible into at least the same number of shares represented by the options written. Which TWO of the following choices are considered to be of the same class of options? An XYZ October 60 put and an XYZ October 50 put An XYZ October 60 call and an XYZ October 50 call An XYZ October 50 put and an XYZ October 50 call An XYZ October 50 call and an XYZ October 50 put I and II I and III II and III III and IV.

S7 Options Flashcards | Quizlet

A class of options represents all the calls or all the puts of one underlying security, regardless of strike price and expiration. The XYZ October 60 put and the XYZ October 50 put are part of the class for puts.

The XYZ October 60 call and the XYZ October 50 call are part of the class for calls.