"John is a registered representative who has discretionary options accounts for 25 of his largest customers. John likes the news coming out of ABCD Corporation and decides to buy ABCD calls for some of his clients. He buys 30,000 ABCD call contracts each for 10 out of the 25 discretionary accounts that he manages. The position limit for ABCD is 250,000 contracts on each side of the market. Which statement is TRUE?"

This is a violation of position limits

Explanation:

When checking to see if there has been a violation of control limits, all the accounts managed by a single entity or all accounts under common control will be added up instead of being evaluated on an individual basis.

John manages 25 accounts out of which he bought calls for 10. He bought 30,000 for each of the 10 which would mean that he bought 300,000 call contracts.

This exceeds the 250,000 contract limit so is a violation of position limits.