Which of the following best defines a covered call?
A)Purchasing a put option to protect a long position in an underlying asset.
B)Position between the floor and ceiling price.
C)The right, but not an obligation, to sell an underlying asset at a fixed price for a specified time.
D)Selling call options while owning the underlying asset

Question

Quizplus · Accepted Answer

A covered call is an options trading strategy where an investor sells call options while simultaneously owning an equivalent number of shares of the underlying asset. The investor earns a premium for selling the call options, but the obligation to sell the shares at a fixed price for a specified time may limit potential gains if the price of the underlying asset increases significantly.

Which of the Following Best Defines a Covered Call