Utilize a hedging technique creates a covered call position

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Reference no: EM131338644

In November an investor wishing to utilize a hedging technique creates a covered call position as follows: 1.He purchases 400 shares stock at $42 and simultaneously sells 3 February 47 1/2 calls at $2.25. 2.In January the stock is trading at $46 and the calls at $2.75. The investor decides to "unwind" his position and liquidate all shares owned. Ignoring commissions, what is his percentage return? Select one: a. 8.99% b. 8.68% c. 8.63% d. Trick question; can't own 400 shares and sell only 3 calls

Reference no: EM131338644

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Utilize a hedging technique creates a covered call position : In November an investor wishing to utilize a hedging technique creates a covered call position as follows: 1.He purchases 400 shares stock at $42 and simultaneously sells 3 February 47 1/2 calls at $2.25. 2.In January the stock is trading at $46 and ..

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