Assume the premium on a call option is $5 per share. Writing this call option when you already own 100 shares
A) requires an immediate investment of $500
B) generates no cash flow because you already own the stock
C) initially generates a positive cash flow of $500
D) eventually will require an investment of $500 unless the stock price increases enough

Question

Quizplus · Accepted Answer

Writing a call option generates an immediate cash inflow equal to the premium received, which is $5 per share for 100 shares, totaling $500.

Assume the Premium on a Call Option Is $5 Per