You wrote a covered call with a strike price of $35 and an option premium of $1.10. Assume the stock price is $34 a share currently and that it falls to $32 a share and remains at that price until the option expires. As a result, you will:
A)lose an amount equal to the option premium.
B)lose the option premium but get to keep the stock.
C)keep both your stock and the option premium.
D)keep the option premium but lose your shares of stock.
E)lose both your stock and the option premium.

Question

Quizplus · Accepted Answer

Since the stock price fell to $32 and stayed below the strike price of $35 until expiration, the option would not be exercised by the buyer. Therefore, you would keep your stock and also retain the option premium of $1.10.

You Wrote a Covered Call with a Strike Price of $35