Options

Question 1

Foreign currency options settle either ____ or ___.
Foreign currency TRADES settle either ___(1-2 buz days) or ___ (mutually agreed upon date in future).

Answer 1

Cash (same day); regular way (next buz day)
Spot; forward

Question 2

Selling a put impacts the cost basis if ___: ____ from cost basis.

Answer 2

The contract is assigned; subtract premium

Question 3

You buy TYX Calls if you think _____.
You buy TYX Puts if you think_____.

Answer 3

Market interest rates will go up.
Market interest rates will go down.

Question 4

Shorting a call or put position means you are ___ one of those positions.

Answer 4

Writing/selling

Question 5

If options you sold w/out owning stock expire and you wind up owning the stock after, you report ___.

Answer 5

Capital Gains or losses on tax forms

Question 6

After opening an option account, 15 days have passed w/out customer returning the a signed options agreement, so at this point ___.

Answer 6

the RR/BD can only accept
Orders for closing transactions.

Question 7

Options sales literature that shows performance must be accompanied or preceded by ___

Answer 7

The latest Options Disclosure Document

Question 8

A customer must be a net buyer in a ___, so buying a more expensive call & selling a cheaper call.

Answer 8

Long call spread

Question 9

If a put is purchased when you’ve held a stock for less than a ___, the IRS ___ the holding period & does not start counting again until the put ___.

Answer 9

Year; wipes out; expires

Question 10

___ stocks, ___ bonds, & ___ LEAP stock options ( with more than 9 months before expiration) can be purchased ___.
Listed stock options ___ on margin.

Answer 10

Listed; listed; listed; on margin.
Cannot be purchased

Question 11

____ transactions, selling a security “___”, & position trades of __ can result in establishing a short position.

Answer 11

Arbitrage; against the box; borrowed shares

Question 12

A ___ =Long call + Long Put. This position wants ___.

Answer 12

Long straddle; volatility

Question 13

A ____=Short call + short put. This position wants ___.

Answer 13

Short straddle; stability

Question 14

A Long ___ is created by purchasing a Call & selling a Put with Different strikes & ___.

Answer 14

Combination; expirations

Question 15

___ is combo of calls & puts with Different prices & the Same expiration date.
Long ___ buys options, while short ___ sell options.

Answer 15

Strangle; strangle; strangle

Question 16

Long __ & short ___ require the same Security, same Strike price, & same Expiration date.

Answer 16

Straddles; straddles

Question 17

Debit call spread is __

Answer 17

Purchase of a more expensive call and sale of a cheaper call

Question 18

Credit call spread is __

Answer 18

Selling a more expensive call and buying a cheaper call

Question 19

Debit put spread is ___

Answer 19

Buying a more expensive put and selling a cheaper put

Question 20

Credit put spread is ___

Answer 20

Selling a more expensive put and buying a cheaper put.

Question 21

Price spread aka ___ spread included legs with different ___.

Answer 21

Vertical spread; strike prices

Question 22

Calendar spreads aka ____ involve legs with different ____

Answer 22

Horizontal spreads; expiration dates

Question 23

Debit spreads need __ gaps between premiums to be profitable.

Answer 23

Wider

Question 24

Credit spreads need ___ gaps between premiums to be more profitable.

Answer 24

Narrower

Question 25

Collar is created against a long stock position by buying a put as insurance & ___ to help pay for that insurance. It’s a hedge & ___ strategy.

Answer 25

Writing a call; income

Question 26

If a RR wishes to distribute an options retail communication to her customers, the retail communication 1) must be approved in advance of distribution by a ___
2) must be approved 10 days in advance of use with the SRO if it is to be distributed to customers who have not received the ___
3) can be distributed to any customer who already has an Options Disclosure Agreement without ___.

Answer 26

1) registered options principal
2) Options Disclosure Document
3) without requiring prior filing with the SRO