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A) Explain how to write a covered call on a stock. B) Suppose at the maturity, the terminal stock price is S T . The

A) Explain how to write a covered call on a stock.

B) Suppose at the maturity, the terminal stock price is ST. The strike price for the call option is K. Construct a table that shows the payoff for each position and total payoff from a covered call strategy, in different terminal stock price (ST) scenarios.

C) Explain why a covered call is not a good hedging strategy.

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