Suppose You Write a Covered Put Option by Depositing a Cash

question 3

Multiple Choice

Suppose you write a covered put option by depositing a cash amount equal to the strike price in your brokerage account.Then which of the following statements is INCORRECT?

• A) This is a covered strategy.
• B) This is a hedged strategy.
• C) This is a put writing strategy.
• D) This is similar to a short put strategy.
• E) This is an uncovered strategy.

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Definitions:

Neurotic

A term relating to neurosis, involving long-term tendencies to experience negative emotional states like anxiety, depression, or irritability.

Introverted

Describing a person predominantly concerned with their own thoughts and feelings rather than with external things.

Extraversion

A personality trait characterized by orientation towards the external environment and enjoyment from engaging in social interactions, as opposed to introversion.

Big Five

A model describing five major personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.