The writer of a covered call has taken a(n)
A) conservative investment position with unlimited potential profits.
B) conservative investment position with limited profits.
C) aggressive position with limited losses and unlimited potential profits.
D) aggressive position with potentially unlimited profits or losses.

Question

Quizplus · Accepted Answer

A covered call involves holding a long position in an asset while selling a call option on the same asset. This strategy is conservative because it limits potential profits to the premium received plus any gains up to the strike price, while the risk is reduced by owning the underlying asset.

The Writer of a Covered Call Has Taken A(n)