Series 7 practice questioneasyOptions — Position Limits
Position limits for options apply to the number of contracts an investor can hold on:
- AA single exchange
- BThe same side of the market for the same underlying security✓ Correct answer
- CAll securities in a portfolio combined
- DA single expiration month
Explanation
Why B — The same side of the market for the same underlying security
Position limits restrict the number of option contracts an investor can hold on the same side of the market (bullish or bearish) for the same underlying security. Long calls and short puts are on the same side (bullish), as are long puts and short calls (bearish). These limits prevent market manipulation.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 755+ Series 7 questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Investment Information & Recommendations questions
- An investor who previously bought a call option can close the position before expiration by:
- Options on exchange-traded funds (ETFs) are settled by:
- An investor buys 1 ABC Jun 65 put at $8 and writes 1 ABC Jun 55 put at $3. What is the breakeven point?
- Under which circumstance would early exercise of an American-style call option most likely occur?