Chapter 02 · Section 2.1

Covered Short Put

We have just seen that one short call is covered if the writer of the call also holds the underlying. In what case is a short put covered?

a) With a long position of the underlying
b) With a long call position
• c) With a long put position
  No. In this case you will liquidate your position rather that cover it.
  d) With a short position in the underlying

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