Series 7 Exam Question 84: Answer and Explanation

Question: 84

Ayla K. purchased 1 VMO Feb 60 put for 7 and purchased 1 VMO Feb 55 call for 2. This strategy is a

• A. long straddle
• B. long combination
• C. debit spread
• D. vertical spread

Correct Answer: B

Explanation:

B. If an investor purchases a call and purchases a put with the same stock but different expiration dates and/or strike price, they had created a long combination.