SIE practice questionmediumOptions
A customer owns 100 shares of ABC stock and sells a call against it. What is the name of this strategy?
- ANaked call
- BProtective put
- CCovered call✓ Correct answer
- DCovered put
Explanation
Why C — Covered call
Writing (selling) a call against owned stock is called a covered call, designed to generate income. A protective put is a put purchase for downside protection. Naked calls are uncovered. Covered put is not a recognized strategy.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Options questions
- An investor buys a put option for $2 on a stock with a $40 strike price when the stock trades at $39. At expiration,…
- As option expiration approaches, what typically happens to an option's time value?
- Which term describes the amount by which an option is in-the-money?
- Which options strategy is best suited for generating income in a flat, non-volatile market?