Series 7 practice questioneasyOptions — Contract Size
One standard equity option contract represents how many shares of the underlying stock?
- A10 shares
- B50 shares
- C100 shares✓ Correct answer
- D1,000 shares
Explanation
Why C — 100 shares
One standard equity option contract covers 100 shares of the underlying stock. Therefore, when option premiums are quoted per share (e.g., $3), the total cost of one contract is $3 x 100 = $300. This is important for calculating profits, losses, and breakeven points.
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