Pop Quiz #2: Remember taking multiple choice tests in school? Well, try the six multiple choice questions below related to Covered Calls. For each question, choose the one letter that you think is closest to being correct.
I will post my answers and brief explanations to each of these early next week.
In the mean time, please email me at partlow@cox.net with your answers and I will send you a reply with the correct answers.
Since the purpose of this blog is to provide education and information about Covered Calls to everyone interested in this type of investing (from newbies to experts and everyone in between), please go ahead and give your best guesses to these questions, even if you are a newbie and these questions are difficult for you. Comparing your answers to mine will help you learn more about Covered Calls investing.
1. Covered Calls are best described as:
A. A stock investing strategy
B. An options strategy
C. A stock hedging strategy
D. A spread strategy
E. None of the Above
2. Covered Calls return-on-investment results are:
A. Better than a stocks buy-and-hold portfolio
B. Worse than a stocks buy-and-hold portfolio
C. About the same as a stocks buy-and-hold portfolio
D. None of the Above
3. Covered Calls are _____________ than buying-and-holding stocks.
A. more risky
B. less risky
C. about the same risk
D. None of the Above
4. The largest time value in a Call option occurs:
A. at-the-money
B. in-the-money
C. out-of-the money
D. None of the Above
5. The most likely time for a Covered Calls position to be assigned early is:
A. Anytime the option is in-the-money
B. When the stock increases from the purchase price
C. The day before the options expiration date
D. The day before the stock ex-dividend date
E. None of the above
6. When Cash-Secured Puts are transacted at the same time, at the same strike price, at the same expiration date, and for the same stock as Covered Calls, they are:
A. The same as Naked Covered Calls
B. The opposite of Covered Calls
C. Almost Equivalent to Covered Calls
D. More Risky than Covered Calls
E. More Conservative than Covered Calls
F. None of the Above
Bonus Question -- Take a Guess: What percentage of respondents will get all six questions correct? Email me your guess to partlow@cox.net along with your answers to the six questions.
Note: I will include the exact percentage in my blog post along with my answers to the questions.
Good Luck and Have a Good (and Safe) Weekend,
Jeff
