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Which of the following situations is possible for a writer of a covered call option?
Suggested Answer: D
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selling the security he already owns. A ''covered'' call is written on stock already owned.
12 comments · newest first
BI
Billy
3 days ago
B) is just a standard requirement, nothing special.
LA
Laticia
8 days ago
I think C) is a smart move for hedging.
CE
Celia
13 days ago
A) is definitely possible!
GE
Gertude
18 days ago
D) makes sense too, especially if you want to take profits.
NA
Nan
24 days ago
Wait, can you really buy the stock if the call is exercised? Sounds risky!
GE
Geraldo
29 days ago
B) is just standard procedure, right?
EL
Elvera
1 month ago
I think C) is a smart move for hedging!
HE
Herminia
1 month ago
A) is definitely possible if the call is exercised.
TA
Tanesha
1 month ago
Depositing margin into the account sounds familiar, but I can't remember if it's directly related to writing covered calls. Is that option B really necessary?
WE
Wei
2 months ago
I recall a practice question where we discussed the implications of selling the security we already own, which makes option D seem plausible for a covered call writer.
LI
Lilli
2 months ago
I'm not entirely sure about option C. I remember something about hedging, but can you really hedge against unlimited losses with a put when writing a covered call?
AL
Allene
2 months ago
I think option A makes sense because if the call is exercised, the writer has to deliver the stock, so buying it would be necessary.