SIE practice questionhardProhibited Activities
Which practice is specifically prohibited to prevent market manipulation in options trading?
- AExecuting customer orders at best available prices
- BBuying puts to hedge a stock position
- CPrearranged trading to create false volume✓ Correct answer
- DWriting covered calls
Explanation
Why C — Prearranged trading to create false volume
Prearranged or collusive trading is manipulative and illegal. The other actions are standard, legal options strategies.
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