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Suppose a company has lots of treasury shares. Can it raise cash by selling call options covered by the treasury stock? If the stock price ends below the strike price of the calls sold, then the company pockets the premium from the options. If the stock price ends above the strike price of the call, the company sells the treasury shares at the strike price, generating lots of cash (total cash gain = [number of shares * strike price] + option premium collected). Do companies use this option strategy in practice? If not, what are the disadvantages and/or obstacles?

(Opposite question: Do companies sell puts when buying back shares?)

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