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
A short put position is covered against the risk of loss when a position in the underlying is taken.