Which of the Following Statements Is INCORRECT About Covered Call

question 8

Multiple Choice

Which of the following statements is INCORRECT about covered call writing?

• A) Covered call writing is known as a buy-write if one simultaneously buys the stock and sells the call,but it's an overwrite if one sells the call after purchasing the share.
• B) The Chicago Board Options Exchange's S&P 500 BuyWrite Index (BXM)is a benchmark for measuring the performance of covered call writing strategies.
• C) Covered call writing is considered a speculative strategy whose objective is to beat the market.
• D) Covered call writing is considered a hedge strategy.
• E) Many traders write covered calls to generate extra income.

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Definitions:

Popular Anger

Widespread dissatisfaction or frustration among the general public, often directed towards social, economic, or political issues.

Government Price Ceiling

A legally imposed maximum price on goods or services to prevent prices from rising too high, often leading to shortages.

Market

A place or mechanism where buyers and sellers come together to trade goods, services, or financial instruments.

Inefficiency

A lack of productivity or effectiveness in the use of resources, often leading to waste.