New Series 9 ~ Chapter 2

Front 1

An RR wishes to place an announcement in the newspaper that simply includes the firms name; the RR name; and the following statement: "For info on investing in options, please call..." In order to place the advertisement who has to approve it?

Back 1

approval must be obtained from the firm's designated ROP prior to use.

Front 2

Trading in a stock is suspended. What will occur with the options tied to the security?

Back 2

Trading will be halted in options contracts on the suspended stock.

Front 3

A customer buys 1 XMI June 215 Call @ $4 and sells 1 XMI June 195 Call @ $19 when the Major Market Index closed at 210. A profit will be realized when:

I. The spread between the premiums narrows

II. The index remains at 210

III. The index declines below 210

IV. Both contracts are exercised

Back 3

I, III. Credit spreads profit when the spread narrows.

Front 4

An officer is granted options to buy restricted shares of his company's stock. Under Rule 144, the officers holding period in that stock commences when?

Back 4

On the day that the options are exercised.

Front 5

An accommodation liquidation order is a:

market order

limit order

stop order

market if touched order

Back 5

limit order

Front 6

If the holder of an OEX option contract decides to exercise, the holder will receive:

Back 6

the in the money amount on the contract.

Front 7

On the floor of the Chicago Board Options Exchange, duties similar to those performed by the NYSE Specialist are handled by the:

Back 7

market maker

Front 8

Buy Write Strategy

Back 8

A very safe option strategy when long blue chip stocks and writing covered calls for extra income.

Front 9

The initial margin requirements to sell PHLX traded options on ETFs on broad-based indexes is:

5%

10%

15%

20%

Back 9

15%

Front 10

Exercise limits on the CBOE are applied over a limit period of:

Back 10

5 business days

Front 11

Which of the following individuals CANNOT buy options for his own account?

I. Order Book Official

II. Specialist/ DMM

III. Market Maker

IV. Floor Broker

Back 11

I, IV.

Front 12

The initial premium of an options contract is determined by the:

a. Options Clearing Corporation

b. Securities and Exchange Commission

c. Market value of the underlying stock and length of time of the contract

d. Chicago Board Options Exchange

Back 12

C. Market value of the underlying stock and length of time of the contract.

Front 13

Initial approval of each discretionary options account, in writing, is performed by the:

Back 13

BOM

Front 14

A customer buys 1 ABC Jan 50 Call @ $4 when the market price of ABC is $51. The stock then moves to $58 and the customer exercises. The tax consequence upon exercise is:

a. capital loss of $400

b. capital gain of $400

c. capital gain of $800

d. C/B of $5400

Back 14

C/B of $5400. If a customer exercises a call, he is buying the stock. His C/B is the purchase price of the stock ($50) plus the premium paid ($4) = $54 C/B per share. No taxable event occurs until the stock is sold.

Front 15

Which of the following will affect the VIX option premium?

a. Time to expiration

b. SPX price level

c. SPX volatility

d. All of the above

Back 15

C. SPX volatility

Front 16

The min equity for an individual customer to open a portfolio margin account is:

Back 16

$100,000

Front 17

Which of the following positions can be taken in a portfolio margin account?

I. Equity options

II. Index options

III. Unlisted derivatives

Back 17

All of these can be taken in a portfolio margin account.

Front 18

What is a Contrary Exercise Advice (CEA)?

Back 18

A notice that can be used to either:

*exercise an expiring option that is out of the money

*stop the automatic exercise of an expiring option that is in the money.