Covered call

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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.

Covered Call

A position in which an investor short sells or writes an option contract, giving the buyer the ability to buy the underlying asset on demand while also owning the underlying asset. For example, an investor has a covered call position when he writes a call for 100 shares of AT&T and owns at least 100 shares of AT&T. This means that if the holder of the call exercises the option, the investor will be able to sell the shares without a problem. Investors often use a covered call strategy when they do not expect the option to be exercised and simply want to collect the premiums without exposing themselves to the risk of loss if the option is actually exercised.
References in periodicals archive ?
The Calamos Hedged Equity Income Fund continues the firm's history of providing liquid alternative strategies, including covered call writing.
The target fund makes investments in high-yield bonds, convertible bonds and equities, which includes covered call writing.
In turbulent markets, such strategies as protective puts and covered call writing may address many of the risk management objectives for insurers.
After discussing how market efficiency and emotions can sabotage investment performance (the latter the province of the field of behavioral finance), he details newer portfolio-enhancing strategies: enhanced indexing, protected leverage, covered call writing, portable alpha, hedge funds and derivatives.
The survey reveals that covered call writing is the most important objective of investors who use options.
While the core strategy of this new edition remains covered call writing, the authors expand into more comprehensive option strategies that offer deeper downside protection or even allow investors to capitalize on market or individual stock volatility.
The principal risks of investing in the Calamos Market Neutral Income Fund include: equity securities risk, convertible securities risk, synthetic convertible instruments risk, convertible hedging risk, covered call writing risk, options risk, short sale risk, interest rate risk, credit risk, high yield risk, liquidity risk, portfolio selection risk, and portfolio turnover risk.
invests in the common shares of the six largest Canadian banks with selective covered call writing in order to generate additional distributable income.
While the Fund currently seeks to achieve its investment objective through a long-short strategy and an opportunistic covered call writing strategy, GPAM will manage the Fund utilizing a covered call strategy developed by GPAM to seek to utilize efficiencies from the tax characteristics of the Fund's portfolio.
The principal risks of investing in the Calamos Market Neutral Income Fund include: convertible securities risk, synthetic convertible instruments risk, convertible hedging risk, covered call writing risk, options risk, short sale risk, interest rate risk, credit risk, high yield risk, liquidity risk, non-U.
His strategies include portfolio protection and covered call writing to generate income.
The fund's core strategies include the use of being both long and short the market beginning with convertible arbitrage, use of covered call writing and equities.