What Is the Disadvantage of a Strategy of Rolling Over

question 2

Multiple Choice

What is the disadvantage of a strategy of rolling over a covered call to avoid exercise?

• A)the call premium is essentially thrown away
• B)transaction costs tend to be high
• C)the stock will incur losses
• D)the call is more expensive when rolled over
• E)none of the above

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Definitions:

Sleeper Effect

A delayed increase in the impact of a message, where an initially disregarded or trivialized message becomes influential over time.

Persuasion

The process of influencing someone's beliefs, attitudes, intentions, motivations, or behaviors.

Argument

An argument is a reason or set of reasons given with the aim of persuading others that an action or idea is right or wrong, often leading to a discussion or debate.

Large Request

A significant demand or query that may require substantial resources or effort to fulfill.