Exam Possibilities for Series 7 – Stocks

Options are decent parts of the Series 7 exam. They come in a variety of combinations and settings on the Series 7. This includes only options, spreads (buying and selling one type), straddle (by calling and placing) and stock options with options.

This article focuses on merged stocks and how to quickly figure out the gains, losses, and unused points for the Series 7 exam. Not with memory charts.

You have to keep in mind whenever you see options with a stock position, whether that stock position is long or short – the option is used for only 1 of 2 things. Protection or income. It is never the main focus of the strategy. So when you’re looking at strategy and trying to see where maximum gains and maximum losses can come from, consider where your money is tied.

If you owned 100 shares of TRW shares at a price of $ 86, you invested $ 8,600. If you see a position like this on the Series 7 exam and buy 1 TRW 80 for $ 300 with it, it’s important to see what happens. When you own stocks, you want them to grow. The put option is the right to sell shares at a strike price (80). If the road was bought alone, without a long stock position on the same stock, then you would want the stock to fall. Your maximum gain is based on a reduction in stocks. Yet if it is owned with a long stock position, Put is their only protection.

In the example:

Buy 100 TRW shares for $ 86, and buy 1 TRW 80 times for $ 300

FOCUS ON THE SHARE when looking at gains, losses and net profit.

The road doesn’t bother you on winning stocks. Focusing on stocks means you always want the stocks you bought to grow. There is a possibility, whether it is a call or a call, for income or protection. In this case, Put was bought, so obviously this is not for profit. It serves to protect depleting stocks.

For this reason, the maximum gain is always unlimited when you own shares and have a path. A premium has been paid, so this will affect the winnings, but the winnings are still unlimited. The shares could reach 100, 200 …

The maximum loss – the package is there to protect the stocks – is IT. The best case scenario is that the stock goes through the roof and the deadline expires, but without placing the stock it can drop to 0. The placement allows the stock to be sold at 80, no matter how low the stock goes. It acts as a stop-loss order. Only, the option does not “start” automatically as a stop order. The investor must use the option and the travel option as a cost. In this case $ 300. So the maximum loss for this stock and the position placed is the point difference in the stock at 86 and the guaranteed selling price of 80, which is $ 600 plus $ 300 of premium paid. Answer: $ 900.

The break-even point with stocks and options is VERY easy for the Series 7 exam. That’s the total cost spent. Position of shares and premium paid or received. The cost of the shares was 86 – the premium was 3, so 89 89. was terminated. You start earning at the age of 90. Watch out for the trick question. Equilibrium and gain are NOT the SAME.

Look for more articles on understanding the 7 Series trading strategy or just for your knowledge. Also look for more tips on our 7 Series Class blog.

American investment training