SIE OPTIONS TEST
QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Call option - ANS-Gives the holder the right, but not the obligation to buy a fixed
amount of securities at a fixed price for a fixed period of time . They pay a premium-
the marker price of the contract.
Holder must deliver cash and take delivery of stock (buy stock)
Customer is fealing bullish if he buys a call contract
Settlement time for call contract - ANS-2 business days after exercise days
Holder - ANS-Buyer (long)
If a customer buys a put contract they are feeling: - ANS-Bearish
Short put (sell put) - ANS-You think the market is going to go up (bullish)
-max potential gain is premium
-max potential loss: b/e down to 0
A customer owning 100 shares of stock could receive protection by: - ANS-Buying a put
put - ANS-Right to sell (for holder)
, If you buy a put, your max potential loss is: - ANS-The premium price
The maximum gain for the holder of a put is: - ANS-The strike price minus premium
paid
If you are selling a call, your max potential loss is: - ANS-Unlimited
To hedge a short stock, you would take what position? - ANS-A long call
Long Call - ANS-Bullish . Contract will be valuable if stock rises above the contracts
strike price
Short Call - ANS-Bearish . Seller wants and thinks market will go down
Long Put - ANS-Bearish
Short Put - ANS-Bearish. Sells wants contract to expire worthless. This will happen if
the market remains at or above the contracts strike price
Long the stock and short the call is an appropriate strategy in a: - ANS-Stable market.
You sell the call contract to generate extra income. If the customer expects the market
to rise, they would not write true call. If they expect it to fall, they would sell the stock
and buy a put as a hedge
You can protect a long stock position by: - ANS-Buying a put. This protects stock you
own (long stock). If market drops they have the put position as insurance and can
exercise the put
You can protect a short stock position by buying: - ANS-A call. If the stock rises, he can
exercise the call and buy the stock at the strike price, eliminating the risk of rising
stock prices
QUESTIONS AND
CORRECT ANSWERS
GRADED A+ 2025-2026
Call option - ANS-Gives the holder the right, but not the obligation to buy a fixed
amount of securities at a fixed price for a fixed period of time . They pay a premium-
the marker price of the contract.
Holder must deliver cash and take delivery of stock (buy stock)
Customer is fealing bullish if he buys a call contract
Settlement time for call contract - ANS-2 business days after exercise days
Holder - ANS-Buyer (long)
If a customer buys a put contract they are feeling: - ANS-Bearish
Short put (sell put) - ANS-You think the market is going to go up (bullish)
-max potential gain is premium
-max potential loss: b/e down to 0
A customer owning 100 shares of stock could receive protection by: - ANS-Buying a put
put - ANS-Right to sell (for holder)
, If you buy a put, your max potential loss is: - ANS-The premium price
The maximum gain for the holder of a put is: - ANS-The strike price minus premium
paid
If you are selling a call, your max potential loss is: - ANS-Unlimited
To hedge a short stock, you would take what position? - ANS-A long call
Long Call - ANS-Bullish . Contract will be valuable if stock rises above the contracts
strike price
Short Call - ANS-Bearish . Seller wants and thinks market will go down
Long Put - ANS-Bearish
Short Put - ANS-Bearish. Sells wants contract to expire worthless. This will happen if
the market remains at or above the contracts strike price
Long the stock and short the call is an appropriate strategy in a: - ANS-Stable market.
You sell the call contract to generate extra income. If the customer expects the market
to rise, they would not write true call. If they expect it to fall, they would sell the stock
and buy a put as a hedge
You can protect a long stock position by: - ANS-Buying a put. This protects stock you
own (long stock). If market drops they have the put position as insurance and can
exercise the put
You can protect a short stock position by buying: - ANS-A call. If the stock rises, he can
exercise the call and buy the stock at the strike price, eliminating the risk of rising
stock prices
