SIE practice questioneasyCovered calls
A customer owns 100 shares of XYZ stock and sells 1 XYZ call. This is known as:
- AA protective call
- BA naked call
- CA covered call✓ Correct answer
- DA bull call spread
Explanation
Why C — A covered call
Owning the underlying stock and selling a call is a covered call. Naked calls are sold without owning the stock; protective and spread strategies are different.
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