A covered call consists of which of the following? A. Buying a call and buying the...
A covered call consists of which of the following?
| A. |
Buying a call and buying the underlying stock |
|
| B. |
Writing a call and buying the underlying stock |
|
| C. |
Buying a put and buying the underlying stock |
|
| D. |
Wriing a put and buying the underlying stock |
Homework Answers
Answer: Option B is correct
Covered call=>Short call + Long position in the stock
A covered call consists of writing a call and buying the underlying
stock
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A covered call consists of which of the following?
A.
Buying a call and buying the...
A covered call consists of which of the following? A. Buying a call and buying the...
A covered call consists of which of the following? A. Buying a call and buying the underlying stock B. Writing a call and buying the underlying stock C. Buying a put and buying the underlying stock D. Wriing a put and buying the underlying stock Suppose we want to chart the profit or loss of a covered call. The stock is purchased at $75 a share. The call premium is $3.45 and has a strike price of $80. At a...
3. Which of the following is most similar to writing a covered call? writing a naked...
3. Which of the following is most similar to writing a covered call? writing a naked call buying a protective put writing a naked put writing a covered put
11. With respect to put-call parity, a covered call is equivalent to? A. Buying a call...
11. With respect to put-call parity, a covered call is equivalent to? A. Buying a call B. Selling a put C. Selling a put and invest in risk-free bond D. Selling a put and borrow from risk-free bond E. None above The following information is used for Question 12-15; You want to establish a straddle on Apple. The available call premium is $5 and put premium is $6. Suppose X=$50 for both the call and the put. 12. What is...
mich of the following strategy can make profit from underlying price drop? A. Buying a put...
mich of the following strategy can make profit from underlying price drop? A. Buying a put B. Selling a put C. Protective put D. Bullish spread E. None above 7. Which of the following is the riskiest single-option transaction? A. Writing a call B. Buying a put C. Writing a put D. Buying a call E. Riskiness of the all the strategies above is the same 8. Which of the following combinations have similarly shaped profit/loss diagrams? A. Covered Call...
1. Elementary Option Trading Strategies (Covered call writing and Floors) Suppose an investor owns 100,000 shares...
1. Elementary Option Trading Strategies (Covered call writing and Floors) Suppose an investor owns 100,000 shares of IBM stock at $120 per share. If the investor expects no large price rise and possible drop in price, he or she) sells 100,000 December 125 call option at $7, receiving $700,000. a. (5 points) If IBM stock drops only slightly from $120 to $113, what is the profit associated with the covered call writing strategy? b. (5 points) If IBM stock rises...
Which of the following statements about the collar strategy is NOT true? A) It involves buying...
Which of the following statements about the collar strategy is NOT true? A) It involves buying the underlying stock, selling a call, and buying a put with a lower strike price. B) It is a bearish strategy. C) Its profit is similar to the profit of a bull spread. D) It gives up some upside potential in exchange for some downside protection.
30. An investor constructs a long straddle by buying an April $30 call for $4 and...
30. An investor constructs a long straddle by buying an April $30 call for $4 and buying an April put $30 for $3. If the price of the underlying shares is $27 at expiration, what is the profit on the position? a. -$4 b. -$2 c. $2 d. $3 31. Consider an option strategy where an investor buys one call option with an exercise price of $55 for $7, sells two call options with an exercise price of $60 for...
Which of the following combinations have similarly shaped profit/loss diagrams? Covered Call vs. a short stock...
Which of the following combinations have similarly shaped profit/loss diagrams? Covered Call vs. a short stock combined with a long call long put option combined with a long call option vs. protective put long call option combined with a short put option vs. long a stock None of those above
You form a long straddle by buying a call with a premium of C = $6,...
You form a long straddle by buying a call with a premium of C = $6, and buying a put with a premium of P = $5. Both options have an exercise price of X = $30, both mature in 2 months, and both have the same underlying asset. Find the profit of this straddle when the price of the underlying asset is S = $35
You form a long straddle by buying a call with a premium of C = $6,...
You form a long straddle by buying a call with a premium of C = $6, and buying a put with a premium of P = $6. Both options have an exercise price of X = $21, both mature in 6 months, and both have the same underlying asset. Find the profit of this straddle when the price of the underlying asset is S = $48.
11. With respect to put-call parity, a covered call is equivalent to? A. Buying a call B. Selling a put C. Selling a put and invest in risk-free bond D. Selling a put and borrow from risk-free bond E. None above The following information is used for Question 12-15; You want to establish a straddle on Apple. The available call premium is $5 and put premium is $6. Suppose X=$50 for both the call and the put. 12. What is...
mich of the following strategy can make profit from underlying price drop? A. Buying a put B. Selling a put C. Protective put D. Bullish spread E. None above 7. Which of the following is the riskiest single-option transaction? A. Writing a call B. Buying a put C. Writing a put D. Buying a call E. Riskiness of the all the strategies above is the same 8. Which of the following combinations have similarly shaped profit/loss diagrams? A. Covered Call...
1. Elementary Option Trading Strategies (Covered call writing and Floors) Suppose an investor owns 100,000 shares of IBM stock at $120 per share. If the investor expects no large price rise and possible drop in price, he or she) sells 100,000 December 125 call option at $7, receiving $700,000. a. (5 points) If IBM stock drops only slightly from $120 to $113, what is the profit associated with the covered call writing strategy? b. (5 points) If IBM stock rises...
30. An investor constructs a long straddle by buying an April $30 call for $4 and buying an April put $30 for $3. If the price of the underlying shares is $27 at expiration, what is the profit on the position? a. -$4 b. -$2 c. $2 d. $3 31. Consider an option strategy where an investor buys one call option with an exercise price of $55 for $7, sells two call options with an exercise price of $60 for...
Which of the following combinations have similarly shaped profit/loss diagrams? Covered Call vs. a short stock combined with a long call long put option combined with a long call option vs. protective put long call option combined with a short put option vs. long a stock None of those above
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