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Covered call writing is a popular investing strategy where investors sell out-of-the money call options against an existing long stock position in order to generate
Covered call writing is a popular investing strategy where investors sell out-of-the money call options against an existing long stock position in order to generate option premium income. Wildwood Corp Underlying Stock price: $50.00 Expiration Strike Call Put June 45.00 8.50 2.00 June 50.00 4.50 3.00 June 55.00 2.00 7.50 Consider a scenario where you bought Wildwood Corp. stock in the past for $31 per share. The stock now trades at $42 per share and you're not sure how much more upside it has and decide to use the June $50 strike Call in a covered call-write strategy. If, at option expiry in June, Wildwood Corp stock is trading at $48 per share and you sell it at that price and the option expires, then what was your total isturn from holding this position incl. the option strategy? $12.50 $17.00 $21.50 O $15.00 $15.50
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