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Covered Call

   Also found in: Wikipedia 0.03 sec.
Covered Call
Having a long position in an asset combined with a short position in a call option on the same underlying asset.

Notes:
This is considered to be one of the safest option positions.


Covered call
A short call option position in which the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally limit the risk the writer takes because the stock does not have to be bought at the market price, if the holder of that option decides to exercise it.

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Your proceeds from the sale of a covered call can offset some or all of the cost of purchasing a protective put.
2002-66, the Service held that if a grantor of a qualified covered call option (QC) holds a put option on the same underlying equity, the purchased put will cause the stock and the QC to be part of a larger straddle and ineligible for the Sec.
The Fund will vary the balance between convertible, equity and high-yield securities and the degree to which the Fund engages in a covered call strategy from time to time based on security valuations, interest rates and other economic market and market factors.
 
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