covered call option

covered call option

A call option sold short by an investor owning the underlying stock. If the option is later exercised against the short seller of the option, the seller is covered by the stock that is owned. Compare naked option.
References in periodicals archive ?
As with other funds in the Maximiser range, the fund will add a covered call option overlay to enhance the yield.
This, says Schroders, is achieved through an actively managed portfolio of higher-yielding global property securities and REITs with a covered call option overlay to enhance the yield.
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.
1092(c)(4), a taxpayer holds a qualified covered call option if the following five factors are met at the time the call option is written: (1) the option is traded on a national securities exchange; (2) the option will not expire for more than 30 days; (3) the option is not deep-in-the-money; (4) the option is not granted by an options dealer; and (5) any gain or loss with respect to the option is not ordinary income or loss.
Covered call option premiums will be treated by the Fund as either short-term or long-term capital gain or loss, depending whether the call option expires, is exercised or cancelled pursuant to a covering transaction, and the timing of such transaction.
As LCM writes covered call options on more of its portfolio, it becomes more subject to the risks associated with covered call option writing and its ability to benefit from capital appreciation in holdings on which options have been written becomes more limited.
Although the Fund will receive premiums from the options written, by writing a covered call option, the Fund forgoes any potential increase in value of the underlying securities above the strike price specified in an option contract through the expiration date of the option.
The Fund invests primarily in equity securities of natural resources and gold companies and intends to earn income primarily through a strategy of writing (selling) primarily covered call options on equity securities in its portfolio.
As with other funds in Schroders Maximiser range, the fund will use covered call options to enhance the yield.
In addition, writing covered call options -- when an asset owner sells the ability for another investor to buy the owner's assets at a predetermined price and date -- may generate income if the price of the underlying asset remains relatively stable or decreases in value.
I decided to sell covered call options on my shares, aiming to profit before they advanced.
To pay his living expenses, he sells covered call options - contracts to buy a stock that he owns.