Series 7 Next Week

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Aug 24, 2005 7:33 pm

I too am taking my series 7  next Thursday (9/1/05).  I have been reviewing Dearborn and Boston University.  I already have my 6 & 63, not sure how the seven will come out.  But any last min suggestions would be helpful.  My main concern is the area on multiple options (spread, straddles, etc).  How much of the exam is on this type of information?


I think I am OK on Munis, and most of the rest seemed like review from the series 6.

Aug 24, 2005 7:53 pm

Richard,<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


I took the S7 exam about 5 years ago. At that time there were not many option questions. I too was concerned about that. The one thing that seemed to help me was going over and over the exam questions on the <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Dearborn cd. Some of the questions on the actual exam were verbatim from the disk.  I wish you luck, I know it's stressful. Let us know how you do.


Aug 24, 2005 8:55 pm

Here...this should help... http://forums.registeredrep.com/forumposts.asp?TID=1137&amp N=1

Aug 24, 2005 9:20 pm

Dewey,


Make nice already, some people really do want help.

Aug 25, 2005 9:21 am

If you're making 80s or a above on your practice exams and you understand all of the concepts discussed you will be fine.


Make sure that you know how to work option problems.  DO NOT MEMORIZE A CHART.  Know the logic and rationale and be able to work the problem.


Know how to calculate the accrued interest on bonds.  Make sure you know which bonds use 30-day months and which ones use actual days.


Those are the two biggest issues with the series 7.  Everything else becomes common knowledge after 3-4 weeks of studying.



Options made easy:


Think of the an option contract problem as and algebraic equation.  Simple algebra in two parts.  One part multiplication.  The other part addition or subraction.



Remember these simple principles.


Buy = positive term (+) = you make money if the underlying stock appreciates in value


Sell = negative term (-) = you make money if the underlying stock depreciates in value


Call = positive term (+) =  you make money if the underlying stock appreciates in value


Put = negative term (-) = you make money if the underlying stock depreciates in value



Thus...


Buy  x  Call =  (+)  x  (+) =  now you know that you are looking to make money when the stock appreciates in value


Buy  x  Put =  (+)  x  (-)  =  you make money when the stock depreciates in value


Sell  x  Call = (-) x (+) = you make money when the underlying stock depreciates in value


Sell  x  Put =  (-) x (-) = you make money when the underlying stock appreciates in value


REMEMBER SIMPLE ALGEBRA. 


A POSITIVE TIMES A POSITIVE IS A POSITIVE.


A NEGATIVE TIMES A NEGATIVE IS A POSITIVE.


A POSITIVE TIMES A NEGATIVE IS A NEGATIVE.



Or as my second grade teacher would explain:


"If you record yourself walking forward and play the tape forward...you look like you're walking forward.  If you record yourself walking backwards and play the tape forward...you look like you're walking backwards.  If you record yourself walking forwards and play the tape backwards...you look like you're walking backwards.  And if you record yourself walking backwards and play the tape backwards...you look like you're walking forward!!!"



There!  Now you can work a simple option contract by inputing the numerical data supplied by the problem.  Further, the series 7 exam makes it easy by being multiple choice.  You can simply "plug & chug" until your answer jibes with one of the choices given.


Finally, you can also do this with multiple option contracts like straddles and spreads.  Work each line (or half) of the multiple option contract separately.  Then calculate the net gain, loss, or breakpoint for the contracts.  Voila!


Any questions?

Aug 25, 2005 11:06 am

Remember these simple principles.


Buy = positive term (+) = you make money if the underlying stock appreciates in value


Sell = negative term (-) = you make money if the underlying stock depreciates in value


Call = positive term (+) =  you make money if the underlying stock appreciates in value


Put = negative term (-) = you make money if the underlying stock depreciates in value



Thus...


Buy  x  Call =  (+)  x  (+) =  now you know that you are looking to make money when the stock appreciates in value


Buy  x  Put =  (+)  x  (-)  =  you make money when the stock depreciates in value


Sell  x  Call = (-) x (+) = you make money when the underlying stock depreciates in value


Sell  x  Put =  (-) x (-) = you make money when the underlying stock appreciates in value



That is good..