Answer (C) is correct . A naked or uncovered option is a call option that does not have the backing of stock. Thus, the option writer will have to purchase the underlying stock if the call option is exercised.
Answer (A) is incorrect because A covered option is one that is written against stock held in the option writer’s portfolio.
Answer (B) is incorrect because An unsecured option is a nonsense term.
Answer (D) is incorrect because A put option is an option that gives the owner the right to sell the underlying asset for a fixed price.
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