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Coverec Call Writing Strategy

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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.

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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.

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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 ...

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