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Series 7 > Spreads / Combos/ Straddles > Flashcards

Spreads / Combos/ Straddles Flashcards

Spreads

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Series 7 Top-off Exam flashcards
1
Q

Butterfly Spread - Loss of $

A

Stock price rises above or falls below the B/E Points

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2
Q

Butterfly Spread - Some Profit

A

Stock remains between 2 B/E points

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3
Q

Butterfly Spread - Max Profit

A

Stock is at middle strike price @ expiration

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4
Q

Butterfly Spread - How is profit realized?

A

Stock is stable

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5
Q

Butterfly Spread

A

2 spreads established simultaneously
- 1 bullish
- 1 bearish

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6
Q

Vertical Spreads

A

Buy 1 ABC March 30 Call
Write 1 ABC March 40 Call

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7
Q

Net Credit Spread - Maximum Loss

A

Difference in strike prices

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8
Q

Net Credit Spread - Maximum Gain

A

Premium

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9
Q

Net Credit Spread - B/E

A

Between 2 strike prices

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10
Q

Goal of Net Credit Spread

A

Wants spread to narrow

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11
Q

Net Credit Spread - Dominant Leg

A

Higher Premium

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12
Q

Net Debit Spread - Maximum Loss

A

Premium

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13
Q

Net Debit Spread - Maximum Gain

A

Strike price - premium

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14
Q

Net Debit Spread - B/E

A

located between 2 strike prices

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15
Q

Goal of Net Debit Spread

A

Wants spread to widen

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16
Q

Net Debit Spread - Dominant Leg

A

Higher Premium

17
Q

Diagonal Spread

A

2 options of the spread have different strike prices & different expiration months

18
Q

Time Spread

A

2 options with same strike price, but different expiration months. Also called HORIZONTAL, calendar, date spread

19
Q

Price Spread

A

Options have same expiration month, but different strike prices. Also called VERTICAL, dollar spread

20
Q

Put Spread

A

Both options are puts

21
Q

Call Spreads

A

Both options are calls

22
Q

Spread

A

Simultaneous sale & purchase of 2 calls or 2 puts of same underlying security, but expiration months and/or strike price are different

23
Q

Combination

A

Straddle position with contracts that have different exercise prices and/or different expiration months

24
Q

Short Straddle

A

Expect price of stock to be STABLE

25
Q

Long Straddle

A

Expect price of stock to be VOLATILE

26
Q

Straddle

A

Purchase of both call/put
OR
Sale of both call/put

Series 7 (2 decks)

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