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196
16.Which of the following describes a covered call?
A.A long call option on a stock plus a long position in the stock
B.A long call option on a stock plus a short put option on the stock
C.A short call option on a stock plus a short position in the stock
D.A short call option on a stock plus a long position in the stock
A.A long call option on a stock plus a long position in the stock
B.A long call option on a stock plus a short put option on the stock
C.A short call option on a stock plus a short position in the stock
D.A short call option on a stock plus a long position in the stock
Answer: D
A covered call consists of a short call plus a long position in the stock. The if the call is exercised the owner of the position has the stock ready to deliver if the other side exercises the call.
A covered call consists of a short call plus a long position in the stock. The if the call is exercised the owner of the position has the stock ready to deliver if the other side exercises the call.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015