An investor who writes standard call options against stock held in his or her portfolio is said to be selling what type of options?

Question

Quizplus · Accepted Answer

Selling call options against stock held in a portfolio is known as a covered call strategy. This is because the investor holds the underlying asset, which "covers" or backs the call options they have sold. Naked options, in contrast, are options sold without holding the underlying asset, which is a riskier strategy. In-the-money and out-of-the-money refer to the strike price of the option and are not directly related to whether the options are being sold against a stock held in the portfolio.

An Investor Who Writes Standard Call Options Against Stock Held