You do a covered call. On Day Zero, the underlying stock is selling for $30.88. The call option has a premium of $4.33 and an exercise price of $30. The stock never pays dividends. When the call expires, the stock is worth $29.65. 

What is your total payoff from the covered call? Assume for simplicity that each option corresponds to one share of the underlying stock.

Answer rating: 100% (QA)

To calculate your total payoff from the covered call we need to consider the income from selling the call option premium and the difference between th... View the full answer