buy-and-write strategy(redirected from Buy and Write Strategy)
An options strategy that calls for the purchase of assets and the writing of covered call options on them.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
An investment strategy in which an investor writes an option while holding an equal and opposite position on the underlying asset. A buy write call option occurs when the investor owns the underlying asset and writes a call so that the underlying is on hand to sell to the option holder if the option is exercised. A buy write put option occurs when the investor writes a put has enough cash to cover the strike if the put is exercised. It is thought that utilizing buy-and-write strategy is a beneficial tactic as the investor may profit from the option premium. See also: Covered option.
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The investment strategy often used by covered writers in which stock is purchased and call options written. A buy-and-write strategy is a fairly conservative approach to generating maximum current income from option premiums and dividends.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.