Series 7 practice questioneasyOptions — Closing Transactions
An investor who previously bought a call option can close the position before expiration by:
- ABuying another call with a different strike price
- BExercising a put option
- CWriting a put with the same strike price
- DSelling a call with the same terms (closing sale)✓ Correct answer
Explanation
Why D — Selling a call with the same terms (closing sale)
An opening purchase is closed by a closing sale. The investor sells a call with the same underlying, strike price, and expiration — this closes out the position. The difference between the purchase price and sale price determines the profit or loss. This is the most common way options positions are closed.
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