Which TWO statements are TRUE about writing covered calls? I ...

By Investopedia Staff AAA
Q:
Which TWO statements are TRUE about writing covered calls?
I. The maintenance margin requirement is 25%.
II. Physical delivery may be required upon exercise.
III. The writer has cash on deposit equal to the cost to purchase the shares from the option holder.
IV. It is a bearish strategy.
a) I and IV
b) II and III
c) II and IV
d) I and II
A:
The correct answer is c)
I is incorrect because there is no margin requirement.
III is incorrect because a call writer must have the shares on deposit. A put writer is required to have the cash equivalent.

RELATED FAQS

  1. I need special accommodations when taking the Series 63 exam. How are such arrangements ...

    Learn more about special accommodations offered by Series 63 testing sites, and discover how to request special accommodations ...
  2. Do I need a class to take the Series 63 exam?

    Learn more about the educational requirements for the Series 63 and what candidates should study. Find out more about NASAA ...
  3. How many attempts at the Series 7 exam are permitted?

    The National Association of Securities Dealers (NASD) has not placed any limits on the number of times you can attempt to ...
  4. I have passed the Series 63 and FINRA Series 7, but would like to become licensed ...

    Becoming an investment adviser representative requires more examination than just taking the FINRA Series 63 exam. See what ...
RELATED TERMS
  1. Series 79

    A examination to ensure a candidate is qualified to become a ...
  2. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  3. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  4. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...

You May Also Like

Related Articles
  1. Professionals

    Should You Add A Securities License ...

Trading Center