S7 Module 2 Test Questions and Answers (Options, Accts, Retirement, New Issues)

S7 Module 2 Test Questions and Answers (Options, Accts, Retirement, New Issues) 1. Which option position is used to hedge a long stock position: long put 2. Which of the option position is used to generate additional income against a long stock position: short call 3. What creates a Straddle: Long a call and put of same amount with same maturity 4. The sale of a call and a put on the same stock with the different strike prices and/or different expirations is a: short combination 5. Strangle: a specific variation of a combination, where both contracts are "out the money 6. spread: the purchase and sale of either 2 calls or 2 puts with differing strike prices and/or differing expirations 7. Long put strategies are profitable if the spread [narrows/widens]: Widens 8. Ratio Call write: a customer who is long stock sells call contracts against the stock position - If a customer sells more call contracts than the stock position owned, this is a "ratio" call write 9. The issuer of listed options contracts is the: OCC 10. The maximum life of a regular stock option contract is: 9 months 11. Exercise limits are applied to all exercises occurring within a business day period: 5 12. Options Position Limits: Any accounts that are under " " are aggregated to determine if there is a position limit violation.: Common Control 13. Common Control is deemed to exist for: (4): 1. owners in a joint account 2. each general partner in a partnership account 3. accounts with common directors or management 4. individual with authority to execute transactions in an account (RIA) 14. Would a husband and wife "jointly" discussing the company before placing the trades be considered "Common Control": YES 15. If the New York Stock Exchange stops trading in a security, the exchange where the listed option for that stock trades will: stop trading in those option classes 16. Are listed option contracts are adjusted for regular cash dividends: NO 17. Are listed option contracts are adjusted for Stock Splits (2:1, 4:1)?: YES 18. Are listed option contracts are adjusted for Special cash dividends: YES 19. Equity LEAP Option: Long-term Equity AnticiPation - an exchange-traded option which enables investor to take advantage of long-term trends 20. Equity LEAP - American-style stock option max life: 28 months 21. Equity LEAP - European Style Index option max life: 36 months 22. Are options traded on NASDAQ?: NO 23. Who is the "order book official": exchange employee who manages the book of public orders 24. Who CANNOT buy options for his own account on an exchange floor: - Floor Broker 25. How are trades routed on the CBOE Order support system?: directly to the trading post, bypassing the firm's communication post