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Series 7 Exam For Dummies, Premier Edition with CD, 2nd Edition by Steven M. Rice

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Chapter 12

Options: The Right to Buy or Sell at a Fixed Price

In This Chapter

arrow Understanding the specifics of options

arrow Feeling comfortable with an options chart

arrow Calculating the maximum loss, maximum gain, and break-even points

arrow Dealing with unconventional options

arrow 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, ...

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