Final answer:
Ursula has decided to employ a covered call strategy, which involves buying the stock and simultaneously selling call options. The call options allow someone else the right to buy her shares at the strike price. By writing the calls, Ursula receives a premium regardless of whether they are exercised or not.
Step-by-step explanation:
The option strategy that Ursula has decided to employ is called a covered call strategy. This strategy involves buying the underlying stock and simultaneously writing (selling) call options against it. By selling the call options, Ursula is giving someone else the right to buy her shares at the strike price of $210 before the expiration date.
In this case, Ursula purchased 700 shares of SAIA stock and sold 7 SAIA call option contracts. Since each contract represents 100 shares, she has covered all her shares with the call options. The strike price of $210 means that if the stock price rises above $210, the buyer of the call option can exercise their right to buy the shares. If this happens, Ursula will have to sell her shares at the strike price to the buyer.
By writing the calls, Ursula receives a premium of $20.20 for each contract. This premium is hers to keep, regardless of whether or not the calls are exercised. It provides her with some downside protection in case the stock price decreases or remains below the strike price.