An investor who writes stock call options in his own portfolio is classified as__________?
Correct answer: B. Covered option
- A. Due option
- B. Covered option
- C. Undue option
- D. Uncovered option
Explanation
Writing a call while owning the underlying stock is a covered call, because the shares are available to deliver if the option is exercised. Writing a call without owning the shares would be an uncovered or naked call.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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