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All main topics / Finance & Investment / Derivatives / Derivatives
196
16.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

Answer: D

A covered call consists of a short call plus a long position in the stock. The if the call is exercised the owner of the position has the stock ready to deliver if the other side exercises the call.
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Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015

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