What does covered call mean?
Definitions for covered call
cov·ered call
This dictionary definitions page includes all the possible meanings, example usage and translations of the word covered call.
Wikipedia
covered call
A covered option is a financial transaction in which the holder of securities sells (or "writes") a type of financial options contract known as a "call" or a "put" against stock that they own or are shorting. The seller of a covered option receives compensation, or "premium", for this transaction, which can limit losses; however, the act of selling a covered option also limits their profit potential to the upside. One covered option is sold for every hundred shares the seller wishes to cover.A covered option constructed with a call is called a "covered call", while one constructed with a put is a "covered put". This strategy is generally considered conservative because the seller of a covered option reduces both their risk and their return.
Wikidata
Covered call
A covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities. If a trader buys the underlying instrument at the same time the trader sells the call, the strategy is often called a "buy-write" strategy. In equilibrium, the strategy has the same payoffs as writing a put option. The long position in the underlying instrument is said to provide the "cover" as the shares can be delivered to the buyer of the call if the buyer decides to exercise. Writing a call generates income in the form of the premium paid by the option buyer. And if the stock price remains stable or increases, then the writer will be able to keep this income as a profit, even though the profit may have been higher if no call were written. The risk of stock ownership is not eliminated. If the stock price declines, then the net position will likely lose money. Since in equilibrium the payoffs on the covered call position is the same as a short put position, the price should be the same as the premium of the short put or naked put.
Numerology
Chaldean Numerology
The numerical value of covered call in Chaldean Numerology is: 6
Pythagorean Numerology
The numerical value of covered call in Pythagorean Numerology is: 1
Translation
Find a translation for the covered call definition in other languages:
Select another language:
- - Select -
- 简体中文 (Chinese - Simplified)
- 繁體中文 (Chinese - Traditional)
- Español (Spanish)
- Esperanto (Esperanto)
- 日本語 (Japanese)
- Português (Portuguese)
- Deutsch (German)
- العربية (Arabic)
- Français (French)
- Русский (Russian)
- ಕನ್ನಡ (Kannada)
- 한국어 (Korean)
- עברית (Hebrew)
- Gaeilge (Irish)
- Українська (Ukrainian)
- اردو (Urdu)
- Magyar (Hungarian)
- मानक हिन्दी (Hindi)
- Indonesia (Indonesian)
- Italiano (Italian)
- தமிழ் (Tamil)
- Türkçe (Turkish)
- తెలుగు (Telugu)
- ภาษาไทย (Thai)
- Tiếng Việt (Vietnamese)
- Čeština (Czech)
- Polski (Polish)
- Bahasa Indonesia (Indonesian)
- Românește (Romanian)
- Nederlands (Dutch)
- Ελληνικά (Greek)
- Latinum (Latin)
- Svenska (Swedish)
- Dansk (Danish)
- Suomi (Finnish)
- فارسی (Persian)
- ייִדיש (Yiddish)
- հայերեն (Armenian)
- Norsk (Norwegian)
- English (English)
Word of the Day
Would you like us to send you a FREE new word definition delivered to your inbox daily?
Citation
Use the citation below to add this definition to your bibliography:
Style:MLAChicagoAPA
"covered call." Definitions.net. STANDS4 LLC, 2024. Web. 27 Apr. 2024. <https://www.definitions.net/definition/covered+call>.
Discuss these covered call definitions with the community:
Report Comment
We're doing our best to make sure our content is useful, accurate and safe.
If by any chance you spot an inappropriate comment while navigating through our website please use this form to let us know, and we'll take care of it shortly.
Attachment
You need to be logged in to favorite.
Log In