SIE practice questionmediumCovered calls
Which of the following best describes a covered call?
- ABuying a call and a put on the same stock
- BWriting a call while owning the underlying stock✓ Correct answer
- CWriting a call without owning the stock
- DSelling a put and a call simultaneously
Explanation
Why B — Writing a call while owning the underlying stock
A covered call involves selling a call while holding the underlying shares. The other choices describe spreads, naked calls, or unrelated options strategies.
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