Finra Exam Series-7 Topic 1 Question 39 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 39
Topic #: 1

Bubba buys one XYZ September 50 call at $7 and sells one XYZ September 60 call at $3. At that time, XYZ stock is at $55. Bubba has no other stock positions.

What is Bubba's maximum possible profit?

A$500

B$600

C$1,000

Dunlimited

Show Suggested Answer

Suggested Answer: B

$600. The maximum profit is the difference between strike prices less the debit amount. The debit amount is $4 ($7 - $3). The difference between strike prices is $10 ($60 - $50). Multiply the $6 difference by 100, which is the number of shares on one option.

by Mattie at May 03, 2022, 05:56 AM

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