Series 7 - General Securities Representative Exam
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 butterflyA
He bought a strangleB
He bought a debit spreadC
He bought a jade lizardD
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!