Take Cover!
Quantitative Finance
Level
2
What is a covered call?
Buy the call at a lower strike and sell the call at the higher strike
Buy the call and buy the put on the same strike
An American call option
Buy the stock and sell the call
Buy the stock and buy the call
Buy the call and sell the put on the same strike
Sell the call at a lower strike and buy the call at the higher strike
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1 solution
Covered call is an options strategy whereby an investor who owns an underlying stock and sell the call option of the corresponding amount. The underlying stock owned is said to provide the "cover" as the shares can be delivered to the buyer of the call if the buyer decides to exercise ( more ).