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 ?
At the same time, they may be looking to generate some near-term income by selling covered calls, assuming that the market takes a breather in the next few days.
One strategy that may be appealing in a relatively flat stock market is to use covered calls. Even if the actual stock you own goes nowhere, trading in options may deliver meaningful investment income.
We have also covered calls for Green, dubbed Philip Greed, to be stripped of his knighthood, including an appeal by MPs in June last year.
Credit Suisse said it has declared coupon payments on covered calls of ETNs for the company's gold shares (NASDAQ: GLDI) and silver shares (NASDAQ: SLVO).
With companies rich in cash, the IBES consensus is targeting a 6 per cent increase in dividends in 2014.The strategy aims to benefit from this attractive attribute of the European stock market whilst isolating equity volatility by selling covered calls. With 22 stable income-generating stocks the strategy is an alternative to other yielding assets and has delivered a performance of 6.69 per cent in 2013."
Variable monthly coupons are generated from selling covered calls, which limits upside participation.
The second is selling covered calls out of the money.
Through selling covered calls on equities in its portfolio, insurers can receive an up-front premium.
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.
If you are willing to sell your stock at a designated price, you can sell covered calls against your stock position.
* Covered calls provide a measure of downside protection (limited to the amount of the premium) against small declines in the price of the stock.
1.1092(c)-1 on the application of the rules governing qualified covered calls (QCCs).