STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

Bob Eder's  Study for the Securities Industry Exam (SIE)  contains 17 chapters, closely following the official FINRA Content Outline for the SIE Exam. One of the important topics that you need to know for the SIE Exam is options. ( See 2.1.3 in the FINRA Content Outline Study Guide. )   Study for the SIE Exam  covers options in depth and detail. Be prepared for Options on the SIE Exam. Don't walk in on the test without a working knowledge of Options. Here is a Bob Eder question on Options. See if you can answer it correctly! Which two of the following are bullish options strategies? i.      long calls ii.     short calls III.    long puts iv.    short puts a.    i and iii b.    i and iv c.    ii and iii d.    ii and iv The answer is (b), long calls and short puts.  Long calls are bullish because they are profitable if the underlying stock goes up. Then the value of a c...

The Securities Industry Essentials (SIE) Exam asks questions regarding options. FINRA's Content Outline for the SIE Exam includes questions on options in Section 2.1.3, including questions on when an option is "in the money," "out of the money," or "at the money." Bob Eder discusses Options and their characteristics in his Study for the Securities Industry Essentials Exam . Here is a sample of Bob Eder's treatment: "When Options Are "In the Money" (2.1.3) A call option is in the money when the stock price is above the strike price of the call. A put option is in the money when the stock price is below the strike price of the put. "EXAMPLE #1 Johnny purchases three calls XYZ June 60 for three when XYZ stock is at 62. This call is in the money because the stock price (62) is higher than the strike price of XYZ call (60).   "EXAMPLE #2 Joan purchases one put ABC Aug 50 for four when ABC stock is at 49. This put is...

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...

Are you unfamiliar with options, their meaning, and how investors make use of them? Be careful, then, if you plan to sit for the Securities Industry Essentials (SIE) exam! What should you know about options? Know the basics, such as what does it mean if you purchase a call or purchase a put? Do you have a right to buy stock? Do you have a right to sell stock? Another question area centers around rights and obligations. For example, if I have a right to sell stock because I have purchased a put, does this mean that must I sell the stock? If I write a put, what does the word "write" mean? These are examples of basic understanding of how options work. Bob Eder's book, Study for the Securities Industry Essentials (SIE) Exam , covers options basics in Chapter 5. It list important options strategies, explains options terminology, explains long options positions, short options positions, in-the money options, out-of-the-money options, American settlement vs European settle...

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...