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Options: 216 free SIE practice questions

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A market maker quotes a stock at $25.00 bid / $25.15 ask. If a customer sells 100 shares at the market, the customer will receive which…hard
In a firm commitment underwriting, the underwriter:medium
The underwriting spread (or gross spread) in a firm commitment offering represents:medium
A customer believes a stock will rise and wants the right to buy it at a set price. Which option should they purchase?easy
A stock is trading at $55. Which of the following has the greatest intrinsic value?medium
A fiduciary investing for a trust must avoid which options strategy?hard
If a stock is trading at $42 and an investor holds a call option with a $40 strike price, what is the intrinsic value of the option?medium
Before a customer may trade options, the broker-dealer must:medium
An investor expects moderate appreciation in a stock and wishes to generate extra income. Which option strategy is most appropriate?hard
If a call option has a strike price of $50 and the stock is trading at $55, what is the option’s intrinsic value?easy
A put option is trading at $6 while its intrinsic value is $4. What is the time value of the option?medium
Which options strategy involves selling call options on stock you already own?medium
If an investor buys a put option, what right do they acquire?medium
What does an investor expect when entering a long straddle options position?hard
Which options strategy involves the highest theoretical risk?hard
An investor buys a call option. What right does this give the investor?easy
An investor expects a stock’s price to decline. Which options strategy would best take advantage of this forecast?medium
A call option is 'in the money' when:medium
If an option's premium is $5, its intrinsic value is $3, what is its time value?hard
An investor writes a put option. If exercised, their obligation is to:hard
Buying a call option gives the investor the right to:easy
If a stock is trading at $55 and a call option has a $50 strike price, what is the call’s intrinsic value?easy
For an at-the-money call option, what is the intrinsic value and time value, assuming the premium is $3?medium
An investor buys a put option and simultaneously sells a call option on the same stock and strike price. What type of position is…medium
What right does the holder of a put option have?medium
An investor writes (sells) a put option, and the stock falls below the strike price. The investor must:hard
Before a customer first trades options, the firm must:hard
Writing a covered call involves:hard
An investor holds a call option with a strike price of $50 when the underlying stock is trading at $60. What is the intrinsic value of the…medium
A call option gives the holder the right to:easy
An investor buys a put option on XYZ stock. The investor is:easy
A call option has a strike price of $50 and the underlying stock is trading at $58. The option has a premium of $10. What is the intrinsic…medium
Which of the following factors increases the time value of an option?medium
A put option with a strike price of $40 when the underlying stock is trading at $35 is:easy
An investor buys 1 XYZ Oct 60 call at $4. What is the maximum potential loss?medium
An investor writes (sells) an uncovered (naked) call option. What is the maximum potential loss?hard
An investor owns 100 shares of ABC stock at $50 and writes 1 ABC 55 call for $3. What is the maximum gain on the combined position?medium
An investor who owns stock and buys a put option on that stock is using a strategy called a:medium
The Options Clearing Corporation (OCC) serves as:easy
What is the key difference between American-style and European-style options?medium
An investor buys 1 XYZ Nov 45 put at $3. What is the maximum potential gain?medium
An investor writes (sells) 1 XYZ Dec 70 put at $5. What is the investor's maximum potential loss?hard
An investor buys 1 ABC 50 call at $3 and 1 ABC 50 put at $2 (same expiration). This is a long straddle. The investor profits when:hard
Which party in an options transaction has an OBLIGATION rather than a right?medium
An investor purchases 1 XYZ Jan 30 call at $2.50. What is the breakeven point?easy
An investor holds 1 XYZ Sep 40 call. At expiration, XYZ is trading at $43. If the OCC auto-exercises this option, the investor will:hard
A key feature of index options that differs from equity options is that index options:hard
Writing covered calls is MOST appropriate for an investor who:medium
A put option with a strike price of $65 is trading at $9 when the underlying stock is at $60. What is the time value of this option?medium
An investor who sells a call option to establish a new short position is executing a(n):easy
Standard listed equity options expire on:hard
An investor buys 100 shares of DEF at $75 and buys 1 DEF 70 put at $3. What is the maximum loss on the combined position?hard
Before an investor can trade options, the broker-dealer must provide:easy
LEAPS (Long-Term Equity Anticipation Securities) differ from standard options primarily because:medium
A puttable bond allows the investor to:easy
Why might an investor choose a puttable bond?medium
Compared to non-putable bonds, puttable bonds generally:hard
An investor buys a call option with a $50 strike price when the stock is trading at $55. What is the option's intrinsic value?easy
If an investor buys a put option, which right does this contract provide?easy
An option's premium is defined as:easy
When does the seller of an option have the obligation to fulfill the contract?easy
Which statement is true about the buyer of a call option?easy
A covered call is created when an investor:easy
An investor who believes a stock's price will fall would most likely:easy
If a put option is exercised, what must the seller of the put do?easy
What is the maximum loss for a buyer of a call option?easy
Which of the following occurs if a listed equity option expires unexercised?easy
An investor owns 100 shares of XYZ and buys a put. Which strategy is this?easy
What is the breakeven point for a long call?easy
Time value in an option premium refers to:easy
A put option with a $30 strike price is trading on a stock currently worth $27. What is the intrinsic value of the put?medium
The maximum gain for a seller of a put option is:medium
A put option has a strike price of $60 and a premium of $4. What is the breakeven price for the buyer?medium
A covered call strategy provides which main benefit?medium
The primary purpose of a protective put is to:medium
If a call option is out of the money at expiration, what happens?medium
Buying both a call and a put at the same strike price and expiration is known as a:medium
A bull call spread is created by:medium
Which statement describes a bear put spread?medium
Which two factors primarily impact the premium of an option?medium
For a put spread, how is the breakeven calculated?medium
When an option is exercised, who determines the specific shares to be delivered?medium
Which Greek quantifies the impact of time decay on options?medium
What does 'vega' represent in options pricing?medium
A bear call spread is created by:medium
A short straddle is profitable when:medium
What's the maximum loss for an uncovered call (naked call) seller?medium
What is true at options expiration for American-style contracts?medium
Which option is most likely to have the highest premium, all else equal?medium
If a covered call is exercised, what happens to the investor’s stock position?medium
A protective put limits losses on a stock to:medium
When is a call seller 'assigned'?medium
A call with a $45 strike and the underlying at $60 has what intrinsic value?medium
If an option is out of the money, what does its premium consist of?medium
An investor expects high volatility but is unsure of direction. Which is the most appropriate options strategy?medium
A trader simultaneously buys a March 50 call at $7 and sells a March 55 call at $3. What's the maximum profit per share?hard
The maximum gain in a debit put spread is calculated as:hard
A bear call spread’s maximum loss occurs if:hard
What is the breakeven point(s) for a long straddle with a $40 strike if each option is bought for $3?hard
If an option expires in the money but is not exercised, what happens?hard
Which Greek increases as an option moves deeper in the money?hard
Which option will have the greatest time value, all else equal?hard
A long put with a $25 strike is purchased for $2. What is the maximum gain per share?hard
A bull put spread profits most if the underlying stock:hard
A trader sells a straddle. What is their maximum potential loss?hard
When an option is exercised, how soon must settlement occur?hard
A customer buys 1 XYZ May 50 call at a premium of $3. At expiration, XYZ is trading at $55. What is the intrinsic value of the option?easy
Which of the following positions has the obligation to buy stock if assigned?easy
If ABC stock is trading at $42, which 40-strike option has intrinsic value?easy
An option premium consists of intrinsic value and which of the following?easy
A customer owns 100 shares of XYZ stock and sells 1 XYZ call. This is known as:easy
Buying a put option while owning the underlying stock is typically done to:easy
An investor believes a stock will be highly volatile but is unsure of the direction. Which two-option strategy is most appropriate?easy
A bull call spread consists of:easy
What is the maximum loss for a covered call writer?easy
An investor buys a call with a $30 strike for $2. What is the breakeven stock price at expiration?easy
Standard listed stock options expire on which day and time?easy
When an option holder exercises their contract, who is selected for assignment?easy
An option premium quoted at $4 means the total premium paid is:easy
Which Greek measures how much an option’s premium changes with a $1 move in the underlying stock?easy
If an investor sells (writes) a naked put option, their market outlook is generally:medium
An investor buys 1 DEF July 40 call at $3. At expiration, DEF closes at $35. What is the investor’s net gain or loss?medium
If a call has a strike price of $70 and the current stock price is $80, but the premium is $14, what is the time value?medium
As option expiration approaches, which component of the option’s price declines most rapidly?medium
The primary risk for an investor writing a covered call is:medium
A customer buys 100 shares of JKL at $45 and 1 JKL 45 put at $2. If JKL falls to $40 at expiration, what is the net result?medium
A long straddle consists of which positions?medium
Which spread is created when a customer buys a higher premium option and sells a lower premium option?medium
An investor establishes a bull call spread by buying a DEF 50 call for $6 and selling a DEF 60 call for $2. What is the maximum gain?medium
With a long put option with a $50 strike and a $3 premium, the breakeven point is:medium
Upon expiration, which options are automatically exercised by OCC?medium
If an investor is assigned on a short call, what must they do?medium
If a put premium rises while the underlying stock remains flat, what is the most likely reason?medium
A trader wants to monitor the impact of time decay on an option’s price. Which Greek should they focus on?medium
If ABC is trading at $56 and the ABC 55 call is trading at $2.50, what is the intrinsic value?medium
An investor sells an uncovered (naked) put. What is the maximum potential loss?medium
A DEF Jul 60 put is trading for $3. DEF stock is currently $55. What is the intrinsic value of the put?medium
If an option is deep in the money and close to expiration, its premium will consist primarily of which?medium
A short straddle profits when:medium
The maximum loss for a short uncovered call writer is:medium
Breakeven on a short call is calculated as:medium
If an option expires worthless, the seller’s result is:medium
Assignment notification for options contracts is ultimately handled by:medium
Which factor decreases an option’s premium?medium
Vega measures an option's sensitivity to changes in:medium
An investor purchases a XYZ Oct 80 call for $7 when XYZ is $85, then sells the call for $12 the next week. What is their net profit or loss?hard
A trader is short 2 ABC 40 puts at $3, and ABC falls to $33. What is the total loss if exercised?hard
If the market price equals the strike price, the option’s intrinsic value is:hard
Which scenario will maximize an option’s time value?hard
A covered call is most appropriate for an investor who believes:hard
Buying a protective put most benefits an investor who is:hard
A long straddle is most profitable when:hard
A bull call spread strategy is designed to:hard
An investor sells a credit put spread by selling a 50 put at $5 and buying a 45 put at $2. What is the maximum gain?hard
For a long straddle (buy call and put, same strike $40, total premium $7), the breakeven points at expiration are:hard
An investor who purchases a call option expects the price of the underlying stock to:easy
What does an investor who buys a put option want the price of the underlying security to do?easy
A call option with a $50 strike price and the underlying stock at $55 has what intrinsic value per share?easy
If an option is trading above its intrinsic value, the extra amount is called:easy
What happens to an option that is out-of-the-money at expiration?easy
Which of the following best describes a covered call?medium
If an investor owns 100 shares of XYZ and buys 1 XYZ put option, this strategy is known as:medium
A customer buys 1 ABC May 50 call and 1 ABC May 50 put. This position is called a:medium
An investor buys a call with a $40 strike and sells a call with a $45 strike. This is a:medium
If an option spread requires a net payment when established, it is classified as a:medium
The maximum loss for an investor who buys a call option is:medium
What is the maximum gain for a written (short) put option?medium
A customer buys an XYZ Jan 40 call at $3. What is the breakeven stock price at expiration?medium
When an option writer is assigned, they must:medium
Which Greek measures the rate of change in an option’s price for a $1 move in the underlying stock?medium
An investor establishes a bear put spread by:hard
Which factor does NOT directly affect the premium of an equity option?hard
A customer who is long an American-style equity call option may exercise:hard
A stock is quoted at $25.10 bid and $25.30 ask. A customer who places a market order to buy will most likely pay:easy
Which statement is TRUE regarding a put option?easy
An investor purchases a call option with a $50 strike price. If the underlying stock rises to $55, what happens to the intrinsic value of…medium
Which options strategy is best suited for generating income in a flat, non-volatile market?medium
As option expiration approaches, what typically happens to an option's time value?medium
A customer owns 100 shares of ABC stock and sells a call against it. What is the name of this strategy?medium
An investor buys a put option for $2 on a stock with a $40 strike price when the stock trades at $39. At expiration, the stock is at $36.…hard
Which term describes the amount by which an option is in-the-money?hard
An investor writes a covered call. What is the primary objective of this strategy?medium
If a customer buys 1 ABC May 50 call at $3 when ABC is at $54, what is the intrinsic value?medium
Which of the following describes a put option?medium
An investor buys a put and a call with the same strike and expiration on the same stock. This strategy is known as:medium
An investor owns 100 shares of DEF, currently trading at $60. They write 1 DEF 65 call at $2 and buy 1 DEF 55 put at $1. What is the…hard
A customer sells an uncovered call. What is the risk?hard
A customer buys a call option for $5 on a stock currently at $45 with a $50 strike. What is the breakeven price?hard
A client buys a call option. What is the maximum loss the client can experience?medium
Which of the following options strategies exposes an investor to unlimited loss potential?hard
Before a customer can trade options, a representative must:easy
A new client wants to write uncovered options. The firm must:medium
The approval of an options account must be performed by which individual?medium
What must a firm provide to a customer before options trading is permitted?medium
Before an investor can trade options in their brokerage account, which is required?easy
A client wants to write uncovered call options. Which is required?medium
Which statement is true about options account trading levels?medium
What must a customer sign and return promptly after opening an approved options account?medium
Before a customer can trade options in an account, which document must they receive and acknowledge?easy
Which statement is TRUE regarding time value in an investor’s options account?medium
A customer in an options account writes a covered call. What must the customer own?medium
Which of the following is a prohibited options practice?easy
A call option has an exercise price of $50, and the underlying stock is trading at $54. What is the intrinsic value of the call?medium
If a put option is 'at the money,' what is its intrinsic value?medium
A representative recommends frequent buying and selling of options to generate commission revenue, regardless of client objectives. This is…hard
A broker-dealer purchases shares of a stock in the open market and simultaneously recommends clients buy calls on the same stock to drive…easy
A registered representative sells out-of-the-money call options on a company after overhearing executives discuss a major technology…easy
A registered representative spreads false rumors to clients to induce trading. This practice is:medium
A broker tells a client that an out-of-the-money option has significant intrinsic value to encourage a purchase. This statement is:medium
A rep encourages a client to purchase uncovered options beyond the client’s stated risk tolerance and financial resources. This is an…hard
Selling call options while possessing material, nonpublic information about the underlying security is considered:easy
A registered rep recommends an uncovered options strategy to a conservative investor without discussing risks. This is:medium
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:medium
A trader attempts to manipulate the settlement price of an option by placing large orders at the close of trading. This activity is:medium
An options market maker colludes with another firm to fix options prices away from the prevailing market. This conduct is:hard
An options trader at a broker-dealer hears confidential client information about an upcoming merger while in the elevator and uses this…hard