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15 April, 06:45

An investor's investment objective is income. He is long 100 shares of ABC, a dividend paying stock. The last sale of the stock was $50.25. As a hedge, the investor is also short a July 50 call on ABC. The last sale of the call was $0.50. ABC declares a $.75 a share dividend. A suitable recommendation to the investor would be to:

(A) Write another short call on ABC before the ex-date

(B) Close the existing short call on ABC before the ex-date

(C) Buy a call on ABC on the ex-date

(D) Sell the ABC stock

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Answers (1)
  1. 15 April, 07:04
    0
    D sell the abc stock
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