The Combination of a Position in a Covered Call and a Position

question 7

Multiple Choice

The combination of a position in a covered call and a position in a protective put on a stock index (where the options have the same strike and maturity) is similar to:

• A)A leveraged long position in the stock.
• B)A leveraged short position in the stock.
• C)A long position in a balanced index fund (i.e. ,long stock and long investment at the risk-free rate).
• D)A short position in a balanced index fund.(i.e. ,short stock and borrowing at the risk-free rate).

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