3. Which of the following is most similar to writing a covered call?
Please find below the solution.. let me know if you need any clarification..
correct answer is option : B. Buying a protective put.
Both covered call and proctative put provide the cap of loss in the portfolio.
3. Which of the following is most similar to writing a covered call? writing a naked...
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
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...
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...
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
define covered call writing... be clear
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...
Question 2 (1 point) Saved The potential loss for writing a short (or naked) call option in infinite. True False
. Which of the following statements is CORRECT? a. One advantage of forward contracts is that they are default free. b. Futures contracts generally trade on an organized exchange and are marked to market daily. c. Goods are never delivered under forward contracts, but are almost always delivered under futures contracts. d. Forward contracts are for commodities while future contracts are for financial securities. Buying a call and a put with the same strike price is called a _______. Naked...
Suppose you buy 100 shares of Google stock which has a current price of $1,265.13 a share. You want to ensure that you do not lose more than $200 a share. Which of the following option strategies would allow you to do this? A. A covered call B. A naked call C. A protective put D. You cannot ensure that you will not have losses with stocks
The following information is given about options on the stock of a certain company: S0 = $80, X =$70, r =10% per year (continuously compounded), T = 9 months, s= 0.30 No dividends are expected. One option contract is for 100 shares of the stock. All notations are used in the same way as in the Black-Scholes-Merton Model. What is the European call option price and European put option price, according to the Black-Scholes model? What is the cost of...