STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

Before taking the Securities Industry Essentials exam, make sure that  you have a working knowledge of how put and call options work. Section 2.1.3 of FINRA's SIE Content Outline tells us that the SIE exam covers a candidate's knowledge of options expiration dates, strike prices, premiums, and whether options are in-the-money, at-the-money, or out-of-the money. So imagine that you face this Bob-Eder-created question on the SIE exam. How would you answer it? When XYZ stock is at 62, Kenneth purchases one put XYZ Jan 60 for a premium of three. XYZ stock then declines to 59. Which of the following is correct? a)    Kenneth is in the money b)    Kenneth is out of the money c)    the XYZ 60 put is in the money d)    the XYZ put is out of the money The answer is (c). The XYZ 60 put is in the money because XYZ stock at 59 is below the strike price of 60. Whenever, in the case of a put, the stock price is below the strike price of the put, the p...

For this post, we talk about some common mistakes when talking about put and call options. Since the SIE exam covers options, mastering correct terminology before sitting for the exam is important. Let's consider call options first. The purchaser of a call option, on an opening transaction, gains the right to purchase stock or some other asset, such as gold or bonds, at a certain specified price for a specified period of time. The seller of a call, on an opening transaction, is called the "writer," and is obligated to sell stock or some other asset. Now speaking of puts, the buyer of a put option, on an opening transaction, gains the right to sell stock or some other asset, at a certain specified price for a specified period of time. The seller of a put, on an opening transaction, is called the "writer," and is obligated to purchase stock or some other asset. Bob Eder's text  Study for the SIE Exam  contains a full discussion of put and call options in Chapt...

If you plan to sit for the Securities Industry Essentials (SIE) Exam in the near future, you need to know that the SIE exam asks questions about options. The topic of options is contained in Section 2 of the FINRA Study Outline for the SIE test, Section 2 has the most questions, 33 in total, and a chunk of those are on options, found in 2.1.3 of the Study Outline. One of the characteristics of options is identifying a put or call as in-the-money, at-the-money, and out-of-the-money. Make sure you can properly apply these terms. For example, a put option is in-the-money when the stock price is below the option's strike price. If you are fuzzy about these concepts, meaning that you are unable to confidently state when an option is in-the-money, etc., you need help in preparing for the SIE exam.  Bob Eder J.D.'s book Study for the Securities Industry Essentials (SIE) Exam covers options in detail with practice questions and real-life examples.  It is available from A...

Our recently published study text, Study for the Securities Industry Exam (SIE),  contains 17 chapters, closely following the official FINRA Study Guide for the exam. One of the important topics that you need to know for the SIE Exam is options. ( See 2.1.3 in the Study Guide. ) Our book  Study for the SIE Exam covers options in depth and detail. Here are the main topics which our Chapter 5 covers on Options. Be prepared for the SIE Exam. Don't walk in on the test without a working knowledge of options. Call and Put options Options Disclosure Document How to enter options tickets Long Calls Short Calls Long Puts Short Puts Terminology on short options Closing out long options Closing out short options Meaning of options positions Options strategies Bullish options Bearish options Option Strike Prices Option Premiums writing covered options Writing uncovered options Short stock & short put In-the-money options Out-of-the-money options American se...