Chapter 12
Options: The Right to Buy or Sell at a Fixed Price
In This Chapter
Understanding the specifics of options
Feeling comfortable with an options chart
Calculating the maximum loss, maximum gain, and break-even points
Dealing with unconventional options
Reviewing additional topics tested
Welcome to the wonderful world of options. I’m sure you’ve heard stories about the difficulty of options. Put your mind at ease — I’m here to make your life easier. Maybe I’m a little warped, but options are my favorite part of the Series 7 exam! Options are one of the more heavily tested areas — you can expect around 40 questions about them on the Series 7.
A lot of the questions are simple calculations, so in this chapter, I show you how to put numbers into an options chart to make even the more difficult calculations simple. I give you plenty of example questions so you can put those math skills to good use. I also give you a general tour of the options basics — calls and puts, in- and out-of-the-money, ...
