SIE Exam Lesson 14 Options pt 4

SIE Exam Lesson 14 Options pt 4

This is a SIE Exam Lesson 14 Options pt 4  options pt.1which is covering straddle options See how you do if you need help listen to the lesson over.

Questions covered include

1. It is a strategy of buying a put and a call with the same expiration date and the same strike price on the same company.

A. combination

B. protective put

C. spread

D. straddle

2. The last trading day of options is ___.

A. the date of the option’s expiration

B. the date of the option’s expiration minus two business days

C. the last business day of the expiration month

D. the last trade day before the expiration date

3. Options expire on ___.

A. the first Friday of the expiration month

B. the second Friday of the expiration month

C. the third Friday of the expiration month

D. the last Friday of the expiration month

4. It is a type of straddle wherein you sell the straddle.

A. butterfly straddle

B. condor straddle

C. long straddle

D. short straddle

5. The cost of a straddle is equal to ___.

A. the price determined by the seller of the straddle

B. the strike price divided by the beta

C. the sum of the intrinsic values of the call option and the put option

D. the sum of the premiums of the call option and the put option

6. The risk in a long straddle is ___.

A. the breakeven on the downside

B. the difference between the premiums of the call option and the put option

C. the premium of either the call option or the put option, whichever is higher

D. the total premium you paid for both of the options included in the straddle

7. The profit in a short straddle is ___.

A. limited to the downside by the total price of the stock minus the premium you collect

B. limited to the premium you collect

C. limited to the upside by the total price of the stock plus the premium you collect

D. unlimited to the movement of the price of the stock

8. The breakeven for a short straddle is the same as the breakeven for a long straddle.

A. True

B. False

9. In long straddles, the breakeven on the upside is where ___.

A. the new stock price rises above the initial stock price plus the premium of the call option

B. the new stock price rises above the initial stock price plus the total premium of the call and put option

C. the strike price rises above the initial stock price plus the premium of the call option

D. the price of the stock rises above the strike price enough to cover the premiums paid for the put and call options

10. In long straddles, the breakeven on the downside is where ___.

A. the new stock price falls below the initial stock price minus the premium of the put option

B. the new stock price rises above the initial stock price plus the total premium of the call and put option

C. the price of the stock falls below the strike price enough to cover the premiums paid for the put and call options

D. the strike price rises above the initial stock price plus the total premium of the call option and put option

11. In a long straddle, you make profit as long as the stock moved outside the breakeven on the upside and the breakeven on the downside.

A. True

B. False

12. In a short straddle, you lose money when the stock stays within the breakeven on the upside and the breakeven on the downside.

A. True

B. False

13. If you’re looking at buying a straddle, you’re looking for volatility; if you’re looking to sell a short straddle, you’re looking for stability.

A. True

B. False

14. In theory, a stock with a high beta should have lower option prices than a stock with a low beta.

A. True

B. False

15. A stock’s price is $35. The strike price is $30, the call premium is $5.50, and the put premium is $1. What is the breakeven on the upside?

A. $34.50

B. $36.50

C. $39.50

D. $40.50

16. A stock’s price is $80. The strike price is $78, the call premium is $5, and the put premium is $3. What is the breakeven on the downside?

A. $70

B. $72

C. $73

D. $77

17. A stock has a price of $65. The beta is 0.89. The strike price is $63. The call premium is $3 and the put premium is $2. Assuming the stock move with its beta, the market must go up

to ___ to breakeven on this option.

A. 3%

B. 3.37%

C. 4.62%

D. 5.19%

18. A stock has a price of $15. The beta is 1.7. The strike price is $14. The call premium is $2 and the put premium is $1.50. Assuming the stock moves with its beta, the market must go down to ___ to breakeven on this option.

A. 4.5%

B. 14.71%

C. 17.65%

D. 30%

19. You bought a long straddle. The stock price is $55 while the strike price is $53. The call premium is $4.75 while the put premium is $2. If the stock went up to $58, which of the following is true?

A. You would gain profit by collecting the premium.

B. You would gain profit by exercising your call option.

C. You would gain profit by exercising your put option.

D. You would not gain profit because the option is not above the breakeven point.

20. You sold a short straddle. The stock price is $16 while the strike price is $15. The call premium is $1.60 while the put premium is $1.50. If the stock went down to $10, what will be your gain/loss?

A. You would gain $3.10 from collecting the premium. The option would not be exercised because it is out of the money.

B. You would gain $5 by selling the stock.

C. You would lose $1.90 if the put option is exercised.

D. You would lose $5 if the put option is exercised.

 We hope you did well on this SIE Exam Lesson 14 Options pt 3

Total Course 37 hours 10 Min

37 hours 10 Min of audio instruction to help you prepare for the Securities Industry Essentials Exam

59 Audio Lessons for Securities Industry Essentials Exam

13 Bonus Lessons about the finance industry

Securities Industry Essentials Exam Podcast Audio Lessons for the SIE Exam

The full course details:

37 hours 10 Min of audio instruction to help you prepare for the Securities Industry Essentials Exam

59 Audio Lessons for Securities Industry Essentials Exam

13 Bonus Lessons about the finance industry

Securities Industry Essentials Exam Podcast Audio Lessons for the SIE Exam

https://youtu.be/5mnz7Ehm6dM

New Series 7 Exam and SIE Exam details.

All candidates now must now pass both the SIE exam (securities industry essentials exam) as well as the New Top-Off Series 7 Exam. A Series 7 candidate must also have an industry sponsor in order to take the examination to take the SIE Exam the candidate simply needs to be 18 years old and no broker affiliation is needed..

https://www.finra.org/industry/essentials-exam

• “Securities Industry Essentials (SIE) Exam
  
  Available Beginning October 1, 2018
  
  The Securities Industry Essentials (SIE or Essentials) Exam, available beginning October 1, 2018, is a new FINRA exam for prospective securities industry professionals. This introductory-level exam assesses a candidate’s knowledge of basic securities industry information including concepts fundamental to working in the industry, such as types of products and their risks; the structure of the securities industry markets, regulatory agencies and their functions; and prohibited practices.
  
  Key Features of the Essentials Exam
  
  ________________________________________
  
  • The Essentials exam is open to anyone aged 18 or older, including students and prospective candidates interested in demonstrating basic industry knowledge to potential employers.
  
  • Association with a firm is not required, and individuals are permitted to take the exam before or after associating with a firm.
  
  • Essentials exam results are valid for four years.
  
  The Essentials Exam at a Glance
  
  ________________________________________
  
  Number of Items 75
  
  Format Multiple Choice
  
  Duration 105 minutes
  
  Passing Score 70%
  
  Cost $60”

New Series 7 Exam

The New Series 7 Content Outline provides a comprehensive guide to the range of topics covered on the exam, as well as the depth of knowledge required. The outline is comprised of the four main job functions of a general securities representative. The table below lists the allocation of exam questions for each main job funct