Series 7 - General Securities Representative Exam
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Your client just wrote a DEC 40 PUT and wrote a MAR 50 CALL on the same stock, at the same time. Your client has
Sold a Straddle
A
Bought a Debit Spread
B
Sold a Combination
C
Bought Vertical Spread
D
Explanations
Combination. When an investor buys or sells a call and a put on the same stock with different expiration dates and/or strike prices, it is a combination. A Straddle has the same strike and month, Buying Debit Spread, and Buying a Vertical spread are incorrect. The trader sold (wrote) the options