Series 7 - General Securities Representative Exam
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Your client is an extremely active trader. He just bought 5 JKL 140 Calls for 6.00 each. At the same time he bought 5 JKL 100 Puts for $4.00 each. The stock is trading at $121.45 currently. He has a position in the underlying of 1465 shares @ an average price of $90.60. What kind of options position did he just create?
He bought a butterfly
A
He bought a strangle
B
He bought a debit spread
C
He bought a jade lizard
D
Explanations
He bought a strangle; it entails buying an out of the money call and put at the same time. Notice the question asks ONLY about his options position - the exam does this!