Series 4 Practice Questions - Registered Options Principal Qualification Examination Exam

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A registered options principal reviewing a customer account discovers a short strangle position: short $45 put and short $55 call, with the stock at $50. What is the maximum risk?

Limited to the premiums received $$500 minus premiums received Unlimited on the upside, substantial on the downside $$1,000 minus premiums received

Correct Answer:

Unlimited on the upside, substantial on the downside

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