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Covered call: A \covered call" is a position whereby an investor sells a call to their...

Covered call: A \covered call" is a position whereby an investor sells a call to their

broker, but also \covers" that option by placing the share with the broker. If the call

option does not pay off, the broker returns the share to the investor. The broker pay

for the cost of their option at maturity. Draw the payoff diagram for the net covered

call position (that is, the value of one stock - a call option + cash payment as a function

of the stock price). How could the pay-off be more simply created without the use of a call?

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