Call Options
An investor writes an uncovered XYZ 45 Call for $3. What is the investor's maximum potential gain?
A short call writer's maximum gain is the premium received. $3 x 100 shares = $300. The writer keeps this premium if the option expires worthless (stock stays at or below $45).
Complete Analysis & Legal Rationale
A short call writer's maximum gain is the premium received. $3 x 100 shares = $300. The writer keeps this premium if the option expires worthless (stock stays at or below $45).
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:
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
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.