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Finra Series-7 Exam - Topic 7 Question 15 Discussion

In early September, Bubba buys 100 shares of XYZ for $83 per share and simultaneously writes one XYZ March 90 call for $4.What is the price for XYZ stock at which Bubba will breakeven?
D) $79
A) $94
B) $87
C) $86

Finra Series-7 Exam - Topic 7 Question 15 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 15
Topic #: 7
[All Series-7 Questions]

In early September, Bubba buys 100 shares of XYZ for $83 per share and simultaneously writes one XYZ March 90 call for $4.

What is the price for XYZ stock at which Bubba will breakeven?

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Suggested Answer: D

$79. Bubba's breakeven is his cost of the stock less the premium he received ($83 - $4).


by Reita at May 04, 2022, 09:08 PM

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Maryanne
10 months ago
$87 is too low, it’s definitely $86!
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Kallie
10 months ago
Wait, how does that even work?
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Sarah
11 months ago
I thought it would be higher, like $94.
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Clare
11 months ago
Yup, $86 makes sense!
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Lashonda
11 months ago
Breakeven is $86, right?
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Stefanie
11 months ago
If I recall correctly, Bubba bought the shares for $83 and got $4 from the call, so wouldn’t that mean he needs the stock to be at least $87 to breakeven?
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Katina
11 months ago
I’m a bit confused about whether to add or subtract the call premium from the stock price. I feel like I need to double-check my notes on this.
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Carman
11 months ago
I remember a similar question where we had to factor in the premium from the call option. I think it’s the stock price plus the premium received.
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Shayne
11 months ago
I think the breakeven price is the purchase price minus the premium from the call, but I'm not entirely sure how to calculate that.
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Aleisha
11 months ago
Okay, let me think this through. We're processing events in real-time, so we'll want to look at the throughput metrics like "MessagesInPerSec" or "BytesInPerSec". I'm leaning towards "MessagesInPerSec" as the most important one.
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Claudia
11 months ago
Okay, let's see... I remember learning about for subscribing to notifications, so that's my best guess.
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Nathan
11 months ago
Hmm, I'm a bit unsure about this one. I know IT Service Management is important, but I'm not sure what the specific requirements are for a successful implementation. I'll have to think this through carefully.
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