Question

a stockbroker uses a computer program to design trades for clients. designing a trade with tradersys

1. choose strategy
2. choose expiration date
3. enter dollar amount
4. select

un\
strategies
strategy 1: long position buying shares with the expectation that the market price will rise
strategy 2: short position selling shares with the expectation that the market price will fall
strategy 3: limit order setting a maximum market price to buy, or a minimum market price to sell, shares
strategy 4: stop - loss order setting a specific market price to buy or sell shares
strategy 5: covered call buying shares at a contract price
selecting
un\ results in a listing of all available opportunities. when prompted, select
ext\ to complete your trade.
a client would like to set up a covered call strategy. which of the following information will the stockbroker most likely need to discuss with the client?
a. contract price
b. maximum market price
c. minimum market price
d. specific market price

Explanation:

The covered - call strategy involves buying shares at a contract price as stated in the image. To set up this strategy, the stockbroker needs to discuss the contract price with the client. The other prices (maximum, minimum, specific market price) are related to different strategies like limit - order, stop - loss order etc.

Answer:

A. Contract price