investor who writes standard call options against stock held in his or her portfolio is said to be selling what type of options?
A) Put
B) Naked
C) Covered
D) Out-of-the-money
E) In-the-money

Question

investor who writes standard call options against stock held in his or her portfolio is said to be selling what type of options?
A) Put
B) Naked
C) Covered
D) Out-of-the-money
E) In-the-money

Quizplus · Accepted Answer

Selling standard call options against stock held in a portfolio is called "covered call writing" meaning the investor has the stock to cover the option contract in the event of exercise. Therefore, the correct option type is covered, not put or naked. "Out-of-the-money" and "in-the-money" refer to the relationship between the stock price and the strike price of the option, but do not address the fact that the investor has the underlying stock.

Investor Who Writes Standard Call Options Against Stock Held in His