SIE Mastery Exam 2 Review Questions and answers correct

SIE Mastery Exam 2 Review Questions and answers correct The holder of a put on a listed stock exercises. The holder must: - Deliver stock An investor writes 1 ABC Jan 45 Put @ $3. The contract subsequently is exercised. The writer is obligated to: - Buy stock at $45 per share If an equity put writer is exercised, the writer has the obligation to: - Buy stock in 2 business days at the strike price The premium on a call or put option is the: - Cost of the contract The purchase of a call has what advantage over buying the underlying security? - Lower Capital Requirement A customer is short an ABC Jan 60 Call. The position has a profit that the customer wishes to capture. The proper order to enter is a(n): - Closing purchase A customer is short an ABC Jan 60 Put. The position has a profit that the customer wishes to capture. The proper order to enter is a(n): - Closing purchase A customer is short an ABC Jan 60 Put. The position has a profit that the customer wishes to capture. The proper order to enter is a(n): - Closing Sale In November, a customer buys 1 ABC Jan 70 Call @ $4 when the market price of ABC is $71. The breakeven point for the position is: - $74 The sale of an "at the money" call is a: - bear/neutral strategy The sale of a call has all of the same characteristics as selling stock short EXCEPT: A. unlimited loss potential in a rising market B. limited gain potential in a falling market C. low liquidity risk if the position is to be liquidated D. no erosion of value as the position is held - D. no erosion of value as the position is held Which options strategy provides a gain equal to the premium in a bear market? - Short Call A customer sells 1 ABC Feb 50 Call @ $7 when the market price of ABC is $52. The stock moves to $80 and the customer is assigned. The stock is bought in the market for delivery. The gain or loss to the writer is: - $2,300 loss In January, a customer sells 1 ABC Jun 55 Call @ $6 when the market price of ABC is $56. If ABC rises to $62 and the writer is assigned, the customer will: - lose $100 A customer sells 1 ABC