In this article we'll give you a detailed description of the world of options contracts as well as the strategies associated with them. See: Options BasicsOptions Questions By most estimates, there are about 50 questions on options on the Series 7 exam, approximately 35 of which are questions that deal with options strategies.
Most Options Contracts Are Not ExercisedThe majority of options investors are not interested in buying or selling stock.
Time Value for Buyers and Sellers Because an option has a definite expiration date, the time value of the contract is often called a wasting asset. Four No-Fail Steps to FollowOne of the problems that Series 7 candidates report when working on options problems, is that they are not sure of how to approach the questions.
This is because options questions make up a large part of the exam and many candidates have never been exposed to options contracts and strategies.
If an options investor buys to close the position, the investor will sell the contract, offsetting the open long position.
Pay very close attention to the concepts of opening and closing options contract positions and don't be locked into the idea of exercising contracts.
On the short, or sell side, things are exactly opposite in that you could profit from an increase in the asset underlying a put option if you have shorted a put.
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