Option Writers Must Own Common Stock in Order to Write

question 77

True/False

Option writers must own common stock in order to write call options on that particular stock.

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Definitions:

Incorporation Fees

Charges associated with the legal process of forming a corporation, including filing necessary documents with the government.

Common Stock

Common stock signifies ownership in a corporation, granting holders a vote in corporate matters and a portion of the company's earnings via dividends.

Treasury

The department within a government or corporation responsible for managing monetary assets and debt obligations.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with predetermined dividend payments.