SIE Exam Question 666: Answer and Explanation

Question: 666

____ Purchasing a call option and selling a call option on the same stock at the same time.

• A. Collar
• B. Spread
• C. Straddle
• D. Protective put

Correct Answer: B

Explanation:

A spread is the simultaneous purchase of one option and the sale of another option on the same side or position within the market. For example, purchasing a call option and selling a call option on the same stock at the same time is a spread.