SIE practice questionmediumOptions Manipulation
An individual spreads false news to drive up the price of a stock, then sells call options on that stock for a profit. This is:
- APermitted for sophisticated investors
- BLegal if disclosed
- CIllegal manipulation and insider trading✓ Correct answer
- DAcceptable hedging
Explanation
Why C — Illegal manipulation and insider trading
Spreading false news to impact prices is manipulation, whether involving underlying stocks or options. Disclosure or investor sophistication does not make this legal.
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