Series 7 - General Securities Representative Exam

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A hedge fund manager that manages a long-only portfolio of equities wants to create income into the fund without selling underlying stock shares. What strategy might he employ?

Sell shares but replace with long calls while selling puts
A
Buy puts
B
Sell puts
C
Sell calls
D

Explanations

Selling calls creates income and is hedged by the underlying shares already owned in this scenario. For the exam, remember when a question mentions creating income, it is usually selling options. Hedging is usually buying options