Covered 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. Briefly explain whether it would be wise from the funds perspective to write British telecom call options traded on the Philadelphia stock exchange?
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When you write a covered call (sell an option), you are giving someone else the right to purchase your stock at a specified price. For that right, you receive a premium. It's a good way to make money. When you write a call, you have a specified month by which the option will expire.
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<br>There are benefits to covered call writing from the funds perspective.
<br><br>1. You can diversify with many equities
<br><br>2. You can reduce the initial ...
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