Series 7 Exam Question 103: Answer and Explanation

Question: 103

If an investor believes that the S&P 500 will become bearish, which TWO of the following would be appropriate strategies?

I. Buy SPX calls

II. Buy SPX puts

III. Sell SPX calls

IV. Sell SPX puts

• A. I and III
• B. I and IV
• C. II and III
• D. II and IV

Correct Answer: C

Explanation:

C. Since the investor believes that the S&P 500 will turn bearish, it would make sense for them to peruse bearish option strategies on the S&P 500. So, they should buy SPX puts and sell SPX calls.