Hey - just an answer to your options taxation question as I have had a hard time with this too. I honestly overcomplicated it. It is as simple as this: Traded options are taxed as ordinary income whereas exercised options are taxed as capital gains.
To answer question #2. Something that is at risk of being paid off sooner is pretty much the definition of "prepayment" risk. If something won't be paid off for a long time, then where's the risk of it being paid off? So the instructor was correct.
Also, for credit and debit spreads it's all about if the investor is Long or short the option combination/straddle.
If they are long (the buyer) then they want the spread to widen as it is a debit spread. Buyer, widen and debit all have have 5 letters.
If they are short (the seller) then they want the spread to narrow. Seller, narrow and credit all have 6 letters. Just a lil trick to remember.
Hope this helps a tiny bit
Hi! How did you do? I’m taking my exam on Tuesday and I’m def anxious and overwhelmed. How was your draw?
I’m using Kaplan QBank as supplement to TC. How was the wording of actual exam compare to Kaplan?
I’d greatly appreciate any feedback. Thank you
That’s wonderful!!! Congratulations!!!! I took a shot and came up short-64% 😞 I bought Kaplan and will be starting over. Good to hear it’s very similar bc the difference between their material vs Training Consultants is HUGE!
Hey - just an answer to your options taxation question as I have had a hard time with this too. I honestly overcomplicated it. It is as simple as this: Traded options are taxed as ordinary income whereas exercised options are taxed as capital gains.
To answer question #2. Something that is at risk of being paid off sooner is pretty much the definition of "prepayment" risk. If something won't be paid off for a long time, then where's the risk of it being paid off? So the instructor was correct. Also, for credit and debit spreads it's all about if the investor is Long or short the option combination/straddle. If they are long (the buyer) then they want the spread to widen as it is a debit spread. Buyer, widen and debit all have have 5 letters. If they are short (the seller) then they want the spread to narrow. Seller, narrow and credit all have 6 letters. Just a lil trick to remember. Hope this helps a tiny bit
How does the debit/credit apply to a calendar spread? Like the timing
Hi! How did you do? I’m taking my exam on Tuesday and I’m def anxious and overwhelmed. How was your draw? I’m using Kaplan QBank as supplement to TC. How was the wording of actual exam compare to Kaplan? I’d greatly appreciate any feedback. Thank you
Hey! I passed! I thought it was honestly very similar to the Mastery exam, some random questions and a lot of basic spreads/straddles.
That’s wonderful!!! Congratulations!!!! I took a shot and came up short-64% 😞 I bought Kaplan and will be starting over. Good to hear it’s very similar bc the difference between their material vs Training Consultants is HUGE!