SIE - Securities Industry Essentials Exam

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A customer is long 100 shares of ABC stock. The stock is currently trading at $52. He sells a 60 strike call option 48 days to expiration. What did he just sell?

Naked Call
A
Covered Call
B
Long Call
C
Short Put
D

Explanations

Since he owns 100 shares of the underlying stock, the call is a covered call. If he owned no shares and sold the call, it would be a naked call. A long call is when you buy a call. A short put is when you sell a put.