A covered call position is equivalent to a
A) long put.
B) short put.
C) long straddle.
D) vertical spread.
E) none of these.

Question

Quizplus · Accepted Answer

A covered call position involves being long an underlying asset and short a call option on the same underlying asset. This is equivalent to a short put position, as both strategies involve selling an option on an underlying asset that the investor already owns. Therefore, the correct answer is B) short put.

A Covered Call Position Is Equivalent to a