SIE practice questionmediumOptions Manipulation
A trader attempts to manipulate the settlement price of an option by placing large orders at the close of trading. This activity is:
- AA legitimate way to provide liquidity
- BProhibited settlement price manipulation✓ Correct answer
- CAllowed during closing auctions only
- DOnly a violation for equity options
Explanation
Why B — Prohibited settlement price manipulation
Manipulating settlement prices through large end-of-day orders is illegal for all option types, not just equities. True liquidity must not distort prices.
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