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
D
A covered call consists of a short call plus a long position in the stock. Then the owner of the position has the stock ready to deliver if the other side exercises the call.
You might also like to view...
All of the following statements about risk in decision making are correct EXCEPT
A) all business decisions incorporate an element of risk. B) decision makers frequently measure risk and uncertainty incorrectly. C) methodologies are available for handling extreme uncertainty. D) most decision makers are pessimistic about decision outcomes.
A company will choose a cost-based pricing method based on the degree of trust it has in the cost base
Indicate whether the statement is true or false