Suppose that it is 9/15/2022 and that you own 600 shares of XYZ’s common stock. You do not believe that XYZ’s common stock will perform all that well, so you are considering writing an equivalent number of covered calls using the December 2022, X = 55 call option. Explain your potential gains and losses (in dollar terms) from following this strategy. Assume you don’t know the prices from 11/15/2022.

  

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XYZ Price Strike 52.65 55.00 55.00 60.00 60.00 52.65 52.65 52.65 56.90 55.00 56.90 55.00 56.90 60.00 56.90 60.00 Expiration Dec 2022 Mar 2023 Dec 2022 Mar 2023 Dec 2022 Mar 2023 Dec 2022 Mar 2023 - Call - Volume 9923 307 4578 212 1282 3645 468 2986 Price 2.28 3.68 0.94 2.10 3.09 5.09 0.86 2.81 - Put - Volume 2632 108 1875 76 1279 2856 156 1874 Price 4.35 5.48 7.99 8.85 1.10 2.82 3.86 5.51 Date of Quotation 9/15/2022 9/15/2022 9/15/2022 9/15/2022 11/15/2022 11/15/2022 11/15/2022 11/15/2022 XYZ Price Strike 52.65 55.00 55.00 60.00 60.00 52.65 52.65 52.65 56.90 55.00 56.90 55.00 56.90 60.00 56.90 60.00 Expiration Dec 2022 Mar 2023 Dec 2022 Mar 2023 Dec 2022 Mar 2023 Dec 2022 Mar 2023 - Call - Volume 9923 307 4578 212 1282 3645 468 2986 Price 2.28 3.68 0.94 2.10 3.09 5.09 0.86 2.81 - Put - Volume 2632 108 1875 76 1279 2856 156 1874 Price 4.35 5.48 7.99 8.85 1.10 2.82 3.86 5.51 Date of Quotation 9/15/2022 9/15/2022 9/15/2022 9/15/2022 11/15/2022 11/15/2022 11/15/2022 11/15/2022

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