Final answer:
The only method that does not cover a short call position is Option D, a long call with a lower strike price and later expiration. All other options provide a means of covering such a position in options trading.
Step-by-step explanation:
The subject of this question is the concept of covering a short call in the context of options trading. When you have a short call position, you have sold a call option, obligating you to sell the underlying stock at the strike price if the call option is exercised. To cover this position, one can use several techniques to mitigate risk. Option A, cash equal to the aggregate exercise value, is a viable method as it ensures you have the funds to purchase the stock at the market price and sell it at the strike price if exercised.
Option B, a long position in the underlying stock, effectively covers the short call as you already own the stock you are obligated to sell. Option C, an escrow receipt for the stock, also serves as proof that the stock is available to be delivered if the call is exercised. However, Option D, a long call with a lower strike price and later expiration, does not cover the short call, as it is another options position that gives you the right, but not the obligation, to buy stock at a different strike price and expiration date. The correct answer to this question is D.