Series 7 Exam Question 81: Answer and Explanation

Question: 81

Which of the following option positions is a long straddle?

• A. Buying a call and selling a call
• B. Buying a put and selling a put
• C. Selling a call and selling a put
• D. Buying a call and buying a put

Correct Answer: D

Explanation:

D. You should remember that "long" means to buy. Therefore, you can cross off answers (A), (B), and (C) right away because they all have the investor selling something. To create a long straddle, you're buying a call and buying a put with the same underlying stock, the same expiration, and the same strike price.