Cyber Monday 2024! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Free Preparation Discussions
MENU
Finra Exam Series-7 Topic 1 Question 17 Discussion
Actual exam question for
Finra's
Series-7 exam
Question #: 17
Topic #: 1
[All Series-7 Questions]
Topic #: 1
Bubba buys one XYZ November 65 call at $3 and one XYZ November 65 put at $2. XYZ is trading at $72. The put expires and the call is closed at its intrinsic value.
What is the resulting profit?
Suggested Answer:
A
$200. Since XYZ is trading at 72, a November 65 call has an intrinsic value of $700. A sale at that value compared to the cost of $300 is a profit of $400. Subtract the loss of $200 on the expired put to obtain the profit of $200.
Currently there are no comments in this discussion, be the first to comment!