SIE practice questioneasyOptions Trading
Selling call options while possessing material, nonpublic information about the underlying security is considered:
- AHedging
- BCovered call writing
- CIllegal insider trading✓ Correct answer
- DLegitimate speculation
Explanation
Why C — Illegal insider trading
Trading options with inside information is illegal insider trading. Covered calls and hedging are legal if no inside information is used. Speculation is allowed if based on public info only.
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