When the underlying asset (S) is owned and a call option (C) (with strike price X) on the underlying is sold, the strategy is called a covered call. Suppose you own 100 shares on XYZ currently priced at $10.00. You write (sell) an out-of-the-money call option with 6 months to expiry at a strike price of $10.50 over the 100 shares you own, for a premium of $1.00 (for each share).

The break-even share price at expiry for your covered call is Select one:

a)$10.00

b)$9.00

c)It cannot be calculated without more information about the share price at expiry.

d)$10.50