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
• d) With a short position in the underlying
  Yes. If the price of the underlying goes down you will lose on the short put position, but you will gain on the short underlying position. Continue

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