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When the underlying asset (S) is owned and a call option (C) (with strike price X) on the underlying is sold, the strategy is called a covered call
When the underlying asset (S) is owned and a call option (C) (with strike price X) on the underlying is sold, the strategy is called a covered call.
Suppose you own 100 shares on XYZ currently priced at $15.00. You write (sell) a call option with 6 months to expiry at a strike price of $15.50 over the 100 shares you own, for a premium of $1.60 (for each share).
The break-even share price at expiry for your covered call is
Select one:
$13.40
$13.90
$15.50
It cannot be calculated without more information about the share price at expiry.
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