Finra Exam Series-7 Topic 1 Question 10 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 10
Topic #: 1

In mid-September, Bubba sells one XYZ February 50 call at $6. It subsequently expires without being exercised.

How is the premium taxed?

ABubba's cost of the underlying stock is reduced

Bthe $600 premium is a capital gain

Cthe $600 premium constitutes ordinary income

Dthe $600 premium is rolled over into another XYZ call with the next longest expiration date

Show Suggested Answer

Suggested Answer: B

the $600 premium is capital gain. That's simply how the tax law works.

by Leatha at May 07, 2022, 12:33 AM

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