SIE practice questionhardCovered calls
A covered call is most appropriate for an investor who believes:
- AStock will fall sharply
- BStock will remain stable or rise modestly✓ Correct answer
- CStock will rise dramatically
- DStock will be highly volatile
Explanation
Why B — Stock will remain stable or rise modestly
Covered calls profit if stock stays stable or rises moderately. Sharp rises limit gains, sharp drops bring risk.
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