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 above comparison is useful because brokers and investors often compare covered calls to stock-only positions.
If you are willing to sell your stock at a designated price, you can sell covered calls against your stock position.
Written by a successful stock options investor of eighteen years' experience, Covered Calls and Naked Puts is a straightforward guide to low-risk opportunities in the options market.
We navigate choppy markets with covered calls, which mitigates losses, and collects premium income.
CINCINNATI -- In yesterday's edition of Options 101, we learned how shareholders can protect against a potential pullback in the short term, and possibly generate cash on a stagnating stock, by writing covered calls.
A Professionally Managed Portfolio Combining the Diversification of Equities with the Income and Downside Protection Capabilities of Covered Calls
CINCINNATI -- In yesterday's edition of Advanced Options, we broke down the basics of covered calls, which is a relatively conservative strategy often used to limit the risks of stock ownership and collect potential premium on stagnating securities.
The authors reveal the rules and techniques needed to be successful in the business of writing covered calls.
The fund combines an actively-managed portfolio of large-cap stocks with the writing of covered calls.
Writing covered calls against low-priced growth stocks generates a higher percentage return than you would receive from the stock's dividend, if it pays one at all.