A covered call position is
A) the simultaneous purchase of the call and the underlying asset.
B) the purchase of a share of stock with a simultaneous sale of a put on that stock.
C) the short sale of a share of stock with a simultaneous sale of a call on that stock.
D) the purchase of a share of stock with a simultaneous sale of a call on that stock.
E) the simultaneous purchase of a call and sale of a put on the same stock.

Question

Quizplus · Accepted Answer

A covered call position involves owning the underlying asset (in this case, a share of stock) and selling a call option on that same asset. This strategy is used to generate income from the option premium or to protect against a slight decline in the price of the underlying asset.

A Covered Call Position Is