What does covered option mean?
Definitions for covered option
cov·ered op·tion
This dictionary definitions page includes all the possible meanings, example usage and translations of the word covered option.
Princeton's WordNet
covered optionnoun
a put or call option backed by the shares underlying the option
Wikipedia
Covered option
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.
ChatGPT
covered option
A covered option is a financial market transaction in which the seller of the option owns the corresponding amount of the underlying asset, such as shares of a stock or other securities. The purpose of this strategy is to limit the seller's risk exposure in case the option buyer decides to exercise the option. A covered call option and a covered put option are two examples of this strategy.
Matched Categories
Numerology
Chaldean Numerology
The numerical value of covered option in Chaldean Numerology is: 1
Pythagorean Numerology
The numerical value of covered option in Pythagorean Numerology is: 8
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"covered option." Definitions.net. STANDS4 LLC, 2024. Web. 19 Apr. 2024. <https://www.definitions.net/definition/covered+option>.
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