Finra Exam Series-7 Topic 1 Question 17 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 17
Topic #: 1

Bubba buys one XYZ November 65 call at $3 and one XYZ November 65 put at $2. XYZ is trading at $72. The put expires and the call is closed at its intrinsic value.

What is the resulting profit?

A$200

B$300

C$500

D$700

Show Suggested Answer

Suggested Answer: A

$200. Since XYZ is trading at 72, a November 65 call has an intrinsic value of $700. A sale at that value compared to the cost of $300 is a profit of $400. Subtract the loss of $200 on the expired put to obtain the profit of $200.

by Selma at May 08, 2022, 08:14 AM

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