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 standard call options against stock held in a portfolio is known as covered call writing. This means that the investor is covering the option by holding the underlying asset, hence the name "covered". Option contracts that are sold without owning the underlying asset are referred to as "naked" options (choice B). Put options (choice A) give the holder the right to sell an underlying asset, while call options give the holder the right to buy an underlying asset. Out-of-the-money (OTM) and in-the-money (ITM) options (choices D and E) refer to the relationship between the strike price of the option and the current market price of the underlying asset.

An Investor Who Writes Standard Call Options Against Stock Held