SIE practice questionhardLong/short positions
The writer of a naked call faces which risk profile?
- AUnlimited potential loss✓ Correct answer
- BPremium received only
- CUnlimited profit
- DLimited loss to premium
Explanation
Why A — Unlimited potential loss
Naked calls feature unlimited loss if the stock rises sharply. Other answers do not account for risk exposure.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Equity Securities questions
- An investor who writes a call option is said to be:
- A call with a $25 strike and the underlying stock at $22 is:
- Which of the following statements is TRUE regarding a put option that is at-the-money?
- A customer is long 1 ABC 40 put. What does this give the customer the right to do?
- To receive a declared stock dividend, an investor must purchase the stock before which date?
- A call option with a $25 strike is at the money when the stock is at:
- ABC Corporation declares a $1.00 per share dividend. The stock closes at $50 the day before the ex-dividend date. On…
- What is the maximum loss for the buyer of an option contract?
