General Securities Representative (Series 7) Practice Exam

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Prepare for the General Securities Representative Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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When do all options trades settle?

On the same day
The following business day
Within two business days
At the end of the trading day

The correct answer is: The following business day

Options trades settle on the following business day after the trade date, which is a standard practice in the securities industry. This means that if an options trade is executed on a Monday, it will typically settle on Tuesday, provided that both days are business days. This settlement timeframe allows for the necessary processing and clearing of the trades through the Options Clearing Corporation (OCC), which ensures that all obligations are met and both parties in the transaction complete their respective roles. Understanding this settlement structure is vital for traders to manage their positions effectively, particularly in terms of timing for exercising options, or planning for any subsequent trades. Each of the other choices implies a different settlement timeframe, but the standard for options is indeed the following business day, making it crucial for traders to know.