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Finra Series-7 Exam - Topic 5 Question 30 Discussion

Bubba purchases 100 shares of XYZ at 78 and, on the same day, writes 1 XYZ October 80 call for a premium of 4. If the option expires unexercised, what is Bubba's profit on the 100 shares of stock?
D) cannot be determined
A) $200
B) $400
C) $600

Finra Series-7 Exam - Topic 5 Question 30 Discussion

Actual exam question for Finra's Series-7 exam
Question #: 30
Topic #: 5
[All Series-7 Questions]

Bubba purchases 100 shares of XYZ at 78 and, on the same day, writes 1 XYZ October 80 call for a premium of 4. If the option expires unexercised, what is Bubba's profit on the 100 shares of stock?

Show Suggested Answer Hide Answer
Suggested Answer: D

cannot be determined. Since Bubba has not yet sold the stock, a profit cannot be determined on the stock. He has a $400 profit on the option.


by Marti at May 03, 2022, 06:11 AM

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Sylvia
8 months ago
Just to clarify, the premium adds to the profit, right?
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Blossom
8 months ago
It's definitely $200, can't believe some people doubt it!
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Lorita
8 months ago
Wait, how do you get $200? Seems off to me.
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Penney
8 months ago
Totally agree, it's straightforward math!
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Garry
9 months ago
Profit is $200 if the option expires unexercised.
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Alpha
9 months ago
I feel like I need to double-check the calculations. Is it just the premium added to the stock's value, or do I need to consider other factors?
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Tyra
9 months ago
I practiced a similar question where the option was exercised, and I think that made it more complicated. This seems straightforward, but I might be missing something.
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Giovanna
9 months ago
I think the profit would be the difference between the purchase price and the selling price, plus the premium, but I'm not entirely sure how to add that up.
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Lawana
9 months ago
I remember that if the option expires unexercised, I just need to calculate the profit from the shares and the premium received.
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Veronika
9 months ago
I've got a good feeling about this one. The real-time display of race positions and lap times seems like a clear functional requirement for an IT system to support the racing club's activities. I'll go with option A.
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Selma
9 months ago
Option D with the zfs create import command looks interesting, but I'm not sure if that will fully meet the requirement of keeping the production system active during the migration.
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Dorinda
9 months ago
I lean towards 'True' because I believe there's a push for better communication in tech roles now, but I'm not completely confident about it.
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