Series 7 practice questionmediumOptions Calculations 8
An investor writes 1 uncovered XYZ 75 call at 4. What is the maximum possible gain?
- A$400✓ Correct answer
- Bunlimited
- C$79
- D$7500
Explanation
Why A — $400
The most an uncovered call writer can earn is the premium received. With a premium of 4, the maximum gain is 4 x 100 = $400.
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