A client has an options account that is qualified to buy options and sell covered calls. The client calls his representative, telling him that he wants to sell naked calls in the account. Which statement is FALSE about this

The customer must cross-guarantee the account because of the increased risk level.

Explanation:

The statement 'the customer must cross-guarantee the account due to increased risk level' asserts a false claim. While selling naked calls, there is always an increased risk of fall in the prices of the underlying security. In order to reduce this risk, the most viable alternative is to buy the offsetting option or underlying stock. The other options assert true claims regarding the point that must be considered before selling the naked calls in the account.

answer(8,000.)