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Business, 27.04.2021 15:30 mommykathryn10pb9bdb

Covered Call and Protective Put) An investor buys 1 share of stock XYZ at $80 but now has a short term bearish view on the stock. The investor sees that the following options are traded with high liquidity and considers some option strategies. (In your answers, assume that options are traded at the mid-point of bid and ask prices and the transaction costs are zero.) Option Type Maturity Strike Price Bid Ask Call Nov 20, 2020 $90 $2.00 $2.10 Put Nov 20, 2020 $70 $0.80 $0.90 1. Covered Call Strategy a. (1) Explain how the investor can use the above option(s) to construct a covered call strategy.

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