FINRA Series 7 General Securities Representative Qualification Examination (GS) Series-7 Question # 119 Topic 12 Discussion
Series-7 Exam Topic 12 Question 119 Discussion:
Question #: 119
Topic #: 12
Bubba buys one XYZ November 65 call at $3 and one XYZ November 65 put at $2. XYZ is trading at $72. The put expires and the call is closed at its intrinsic value.
$200. Since XYZ is trading at 72, a November 65 call has an intrinsic value of $700. A sale at that value compared to the cost of $300 is a profit of $400. Subtract the loss of $200 on the expired put to obtain the profit of $200.
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