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Finra Series-7 Exam - Topic 3 Question 19 Discussion

In comparing the premium cost of a LEAPS option with a premium of a traditional option on the same security and same strike price, which of the following is generally true?
B) the LEAPS premium will be higher than the traditional option premium
A) the premiums will be approximately the same
C) the premium for the traditional option will be higher than the LEAPS option premium
D) LEAPS premiums do not consider time value

Finra Series-7 Exam - Topic 3 Question 19 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 19
Topic #: 3
[All Series-7 Questions]

In comparing the premium cost of a LEAPS option with a premium of a traditional option on the same security and same strike price, which of the following is generally true?

Show Suggested Answer Hide Answer
Suggested Answer: B

the LEAPS premium will be higher than the traditional option premium. Because LEAPS have a longer time until expiration than traditional options, the premium should be higher.


by Ernie at May 08, 2022, 03:17 PM

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Gerri
8 months ago
I think D is misleading; LEAPS definitely consider time value.
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Abel
9 months ago
Yeah, I've seen LEAPS cost more than traditional options.
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Trevor
9 months ago
Wait, are you sure about that? I thought they were similar.
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Kallie
9 months ago
Totally agree, B is the way to go!
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Lisbeth
9 months ago
LEAPS premiums are usually higher due to longer time frames.
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Tiffiny
9 months ago
I vaguely recall that traditional options might have higher premiums sometimes, but that seems counterintuitive for LEAPS.
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Latonia
9 months ago
I thought the premiums would be similar, but now that I think about it, LEAPS should have more time value, right?
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Sherell
9 months ago
I think I remember that LEAPS options usually have a longer time until expiration, so their premiums might be higher.
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Kathryn
9 months ago
I'm not entirely sure, but I feel like I saw a practice question where LEAPS were definitely more expensive than regular options.
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Marleen
9 months ago
I'm a little confused by the wording here. I'll have to re-read the question a few times to make sure I understand it fully before answering.
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Annalee
9 months ago
Hmm, I'm a bit unsure about this one. I'll need to review the details on triggers, schedulable classes, and batchable classes to decide which option would be best.
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Linsey
10 months ago
Okay, let me see. I remember learning about BootP and how it was an early protocol for diskless workstations to boot from a server. I'm pretty confident that's the right answer here.
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