Q642
An investor who writes stock call options in his own portfolio is classified as
A.
due option
B.
covered option
AnswerC.
undue option
D.
uncovered option
Answer: Option B
Solution
Answer: Option B
Solution:
An investor who writes stock call options in his own portfolio is classified as covered option. A covered call option occurs when the investor owns the underlying asset and writes a call so that the underlying is on hand to sell to the option holder if the option is exercised. A covered put option occurs when the investor writes a put and has enough cash to cover the strike if the put is exercised.