FINRA Series 7 – General Securities Representative — Question 4

Which of the following options positions is characteristic of a short straddle?

Answer options

• A. long one put and short one call
• B. long one call and short one put
• C. long one put and short one call
• D. long one call and long one put

Correct answer: C

Explanation

The correct answer is C because a short straddle involves selling both a call and a put option at the same strike price, which means being short one call and long one put. Options A and D describe different combinations that do not fit the definition of a short straddle, and option B represents a long straddle, which is the opposite position.