SIE EXAM – OPTIONS (QUESTIONS &
ANSWERS 100% ACCURATE)
An investor purchases 1 ABC Jan 45 Call @ $3. The investor subsequently exercises his option
contract. The holder has the right to:
A. buy stock at $45 per share
B. buy stock at $48 per share
C. sell stock at $45 per share
D. sell stock at $48 per share - ANSWERA. buy stock at $45 per share
If the writer of an equity call contract is exercised, the writer must deliver: - ANSWERD. stock in 2
business days
A customer would buy put contracts because the customer: - ANSWERB. is bearish on the underlying
security
If the writer of an equity put contract is exercised, the writer must deliver:
A. cash in 1 business day
B. stock in 1 business day
C. cash in 2 business days
D. stock in 2 business day - ANSWERC. cash in 2 business days
The writer of a put on a listed stock is exercised. Upon assignment, the writer must:
A. pay the premium
B. deliver cash
C. buy stock
D. sell stock - ANSWERC. buy stock
, The "cost" of an option contract is the:
A. premium
B. exercise price
C. market price of the underlying security
D. intrinsic value - ANSWERA. premium
ABC Jan 50 call contracts are trading in the market at .65. What is the dollar price that a customer
would pay for 2 contracts at this price? - ANSWER$130.00
An option contract has intrinsic value if exercise is profitable to the: - ANSWERholder, ignoring the
premium paid
Which of the following contracts has the greatest intrinsic value?
A. ABC Jan 50 Call when the market price of ABC stock is $55
B. ABC Jan 50 Call when the market price of ABC stock is $50
C. ABC Jan 50 Put when the market price of ABC stock is $40
D. ABC Jan 50 Put when the market price of ABC stock is $60 - ANSWERC. ABC Jan 50 Put when the
market price of ABC stock is $40
A client buys an ABC Jul 50 Call @$2 when the stock is trading at $55. The contract: - ANSWERhas 5
points of intrinsic value
If the market price is above the strike price on a put contract, the difference is termed the: -
ANSWERout the money amount
Which options strategy provides the greatest profit potential in a bull market? - ANSWERLong Call
A customer buys 1 ABC Feb 60 Call @ $4 when the market price of ABC is 61. The stock moves to $75
and the customer exercises. The gain or loss to the customer is: - ANSWER$1,100 gain
ANSWERS 100% ACCURATE)
An investor purchases 1 ABC Jan 45 Call @ $3. The investor subsequently exercises his option
contract. The holder has the right to:
A. buy stock at $45 per share
B. buy stock at $48 per share
C. sell stock at $45 per share
D. sell stock at $48 per share - ANSWERA. buy stock at $45 per share
If the writer of an equity call contract is exercised, the writer must deliver: - ANSWERD. stock in 2
business days
A customer would buy put contracts because the customer: - ANSWERB. is bearish on the underlying
security
If the writer of an equity put contract is exercised, the writer must deliver:
A. cash in 1 business day
B. stock in 1 business day
C. cash in 2 business days
D. stock in 2 business day - ANSWERC. cash in 2 business days
The writer of a put on a listed stock is exercised. Upon assignment, the writer must:
A. pay the premium
B. deliver cash
C. buy stock
D. sell stock - ANSWERC. buy stock
, The "cost" of an option contract is the:
A. premium
B. exercise price
C. market price of the underlying security
D. intrinsic value - ANSWERA. premium
ABC Jan 50 call contracts are trading in the market at .65. What is the dollar price that a customer
would pay for 2 contracts at this price? - ANSWER$130.00
An option contract has intrinsic value if exercise is profitable to the: - ANSWERholder, ignoring the
premium paid
Which of the following contracts has the greatest intrinsic value?
A. ABC Jan 50 Call when the market price of ABC stock is $55
B. ABC Jan 50 Call when the market price of ABC stock is $50
C. ABC Jan 50 Put when the market price of ABC stock is $40
D. ABC Jan 50 Put when the market price of ABC stock is $60 - ANSWERC. ABC Jan 50 Put when the
market price of ABC stock is $40
A client buys an ABC Jul 50 Call @$2 when the stock is trading at $55. The contract: - ANSWERhas 5
points of intrinsic value
If the market price is above the strike price on a put contract, the difference is termed the: -
ANSWERout the money amount
Which options strategy provides the greatest profit potential in a bull market? - ANSWERLong Call
A customer buys 1 ABC Feb 60 Call @ $4 when the market price of ABC is 61. The stock moves to $75
and the customer exercises. The gain or loss to the customer is: - ANSWER$1,100 gain
