Finra Exam Series-7 Topic 3 Question 19 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 19
Topic #: 3

In comparing the premium cost of a LEAPS option with a premium of a traditional option on the same security and same strike price, which of the following is generally true?

Athe premiums will be approximately the same

Bthe LEAPS premium will be higher than the traditional option premium

Cthe premium for the traditional option will be higher than the LEAPS option premium

DLEAPS premiums do not consider time value

Show Suggested Answer

Suggested Answer: B

the LEAPS premium will be higher than the traditional option premium. Because LEAPS have a longer time until expiration than traditional options, the premium should be higher.

by Ernie at May 08, 2022, 03:17 PM

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