Question

An options strategy where the maximum potential loss is equal to the difference between the increase in value of the underlying short securities position and the premiums received is a:__________
a) naked call writer
b) Covered call writer
c) naked put writer
d) Covered put writer

Answer 1

Answer:

(B) Covered Call Writer

Explanation:

TOPIC: TRADING & INVESTMENT

An options strategy where

Maximum Potential Loss = [Increase in value of underlying short securities - Premiums Received]

is a covered call writer.

The maximum possible loss per stock or security, in a covered call sale or write, is given by the difference between the increased price/value of underlying short securities and the option premium received from the sale of a call option on the same security.