🏦LTB
SIE: Options
SIE practice questionmediumCovered calls

If a covered call is exercised, what happens to the investor’s stock position?

  1. AThe investor’s maximum loss is unlimited
  2. BThe investor retains ownership regardless
  3. CThe investor must buy more shares
  4. DThe investor must sell the stock at the strike price✓ Correct answer
Explanation

Why DThe investor must sell the stock at the strike price

Exercised covered calls result in the sale of stock at the strike price. The other statements do not reflect the covered call mechanics.

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