Practice Quiz

FINRA Series 7

Category - Series 7

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Which of the following situations is possible for a writer of a covered call option?
  1. buying the underlying stock if the call is exercised
  2. depositing margin into his account
  3. purchasing a put option to hedge against unlimited loss potential
  4. selling the security he already owns
Explanation
Answer: D - selling the security he already owns. A “covered” call is written on stock already owned.
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