Purchase Solution

Coverec Call Writing Strategy

Not what you're looking for?

Ask Custom Question

Assume you are responsible for the management of Bank-ZQ's UK fund and in the process are deliberating a covered call writing strategy. Comment on the pros and cons associated with writing FTSE100 call options traded on the London Futures and Options exchange.

Purchase this Solution
Solution Summary

In about 225 words, this solution discusses the covered call writing strategy, highlighting the pros and cons. A brief discussion on "options" is also provided.

Solution Preview

The FTSE 100 Company's options are known as individual equity options. These are exchange traded contracts listed on the London International Financial Futures Exchange (LIFFE).

An 'option' gives you the right to sell or purchase an asset at a point in the future at a pre-determined price - known as the 'strike' price. If you decide to ...

Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • Call option strategy

    May 100 call contract and writing one IBM May 105 call contract.

  • Covered call writing strategy

    19557 Covered call writing strategy Assume you are responsible for the management of Bank-ZQ's UK fund and in the process are deliberating a covered call writing strategy.

  • ROA/ROE, butterfly spread , option strategy

    The solution 1) Explains how two firms can have same ROA, yet different ROE. 2) Graphs the payoff of a butterfly spread 3) Draws the payoff of an option strategy of writing a call option with X = 50 and buying a call option with X = 60.

  • Option Strategies

    Make a spreadsheet and draw a profit/loss diagram and label all significant points for this strategy. March 80 call at $1.625 March 80 put at $3.50 4. Explain why writing covered calls and writing puts are generally equivalent strategies.

  • Option strategies using call and put options

    Make a spreadsheet and draw a profit/loss diagram and label all significant points for this strategy. March 80 call at $1.625 March 80 put at $3.50 2. XYZ Inc.'

  • Option strategies

    Make a spreadsheet and draw a profit/loss diagram and label all significant points for this strategy. March 80 call at $1.625 March 80 put at $3.50 2. XYZ Inc.'

  • Problems involving stock valuation and investment strategy

    Thus covered call writing is considered a very conservative strategy. Writing naked calls however is extremely risky and leaves you open to vast losses.

  • Explain the concepts of pricing in buying and selling call and put options

    Naked call writing is associated with potentially unlimited losses - it is the most aggressive and risky strategy an investor can use.

  • Put-call parity - The Keller Fund's Option Investment Strategies

    b) Another possible strategy is a Covered Call. This involves owning the stock and writing a call. This strategy will provide some downside protection at the expense of giving up potential gains.

View More Related Solutions