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Official Practice ProblemFINRA Series 7 Blueprint: Function 3
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Question #s7-prep-s7-q-021Function 3Fundamental

Call Options

An investor who is bullish on a stock would most likely:

Correct Choice: C

Bullish = buy calls or sell puts. Bearish = buy puts or sell calls.

Complete Analysis & Legal Rationale

A bullish investor expects the stock price to rise. Buying a call option profits when the stock goes up - it gives the right to buy at a fixed price while the stock rises.

Distractor Autopsy (Why Other Options Are Traps)

FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:

Choice AIncorrect
Concept Trap

Buying puts is a BEARISH strategy - you profit when the stock falls.

Choice BIncorrect
Concept Trap

Selling calls is bearish to neutral - you lose if the stock rises significantly.

Choice CCorrect
None

Matches the verified teaching point in the explanation.

Choice DIncorrect
Concept Trap

Short selling is BEARISH - you profit when the stock falls.

Authorities & References:

Official Standard: Governs options accounts, approvals, and related supervisory requirements (verify current text).

Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.

🏛️

Regulatory Authority & Citations: Primary Legal Sources

Verified citations governing Question #s7-prep-s7-q-021 (FINRA Series 7 Content Outline)

To pass the FINRA Series 7, candidates must understand not just the calculation formulas, but the exact federal securities acts, SRO rulebooks, and statutory frameworks that enforce them. Review the primary authority records below:

FINRAFINRA Rule 2360— Options

Governs options accounts, approvals, and related supervisory requirements (verify current text).

Read FINRA Official Rule
FINRAFINRA Series 7 Content Outline— General Securities Representative Examination (Series 7) Content Outline

Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.

Read FINRA Official Rule

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