SIE (Securities Industry Essentials) Practice Exam

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Which options strategy offers the greatest profit potential in a bull market?

Long Put
Short Call
Long Call
Short Put

The correct answer is: Long Call

The strategy that offers the greatest profit potential in a bull market is the Long Call option. This is because in a bull market, the stock prices are expected to rise and the Long Call option allows you to buy the underlying stock at a fixed price (strike price) and sell it at a higher price in the market. This results in a profit for the option holder. The other options, such as Long Put and Short Put, involve betting on a decrease in stock prices and therefore would not yield high profits in a bull market. Similarly, the Short Call option involves borrowing and selling stocks, which could lead to losses in a market where prices are rising.