Finra Exam Series-7 Topic 5 Question 23 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 23
Topic #: 5

In June, Bubba bought 100 shares of XYZ at $35. In November, he bought a listed put in XYZ with a $35 strike price and a July expiration for a premium of $600. In April, Bubba exercises the put option and uses his stock for delivery.

What is his resulting tax consequence?

Aa $600 capital loss

Bneither profit nor loss

Ccannot be determined without knowing the market price of XYZ upon exercise

Dthis is a wash sale and cannot be included in the investor's tax calculations

Show Suggested Answer

Suggested Answer: A

a $600 loss. The strike price and Bubba's purchase price are the same. He has a $600 loss on the option for the premium he paid.

by Charlene at May 05, 2022, 06:10 AM

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