Finra Exam Series-7 Topic 7 Question 21 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 21
Topic #: 7

Bubba buys one XYZ June 40 call for $1,000 and sells one XYZ March 40 call for $600. Subsequently, the June call is closed for $1,200 and the March call for $900.

What is Bubba's net result?

A$100 loss

B$100 profit

C$200 loss

D$200 profit

Show Suggested Answer

Suggested Answer: A

$100 profit. The long position in the June call is a $200 profit ($1,200 - $1,000). The short position in the March call is a $300 loss ($900 - $300). Combining the gain and loss results in a $100 loss.

by Roxane at May 05, 2022, 06:01 AM

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