SIE Exam Question 495: Answer and Explanation

Question: 495

You are long 10,000 shares of XYZ at 42 and are concerned about a market decline; you would like to take in some additional income. You should:

• A. Sell 10 XYZ Oct 45 calls.
• B. Sell 100 XYZ Oct 45 puts.
• C. Sell 100 XYZ Oct 45 calls.
• D. Sell 10 XYZ Oct 45 puts.

Correct Answer: C

Explanation:

C: To gain some protection and take in premium income, you would sell 100 XYZ Oct 45 calls.