Canadian Securities Course (CSC) Practice Exam · Question
An investor owns 100 shares of XYZ Corp. and sells a call option on those shares. What is this strategy commonly known as?
Selling a call option on shares that the investor already owns is known as a covered call, as the potential obligation to deliver shares is 'covered' by the exi
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Question: An investor owns 100 shares of XYZ Corp. and sells a call option on those shares. What is this strategy commonly known as?
Answer options: ✅ Covered call
- Naked call
- Protective put
- Straddle
Correct answer: Covered call
Explanation: Selling a call option on shares that the investor already owns is known as a covered call, as the potential obligation to deliver shares is 'covered' by the existing stock position.
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