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Covered call

The selling of a 

Call

 option while simultaneously holding an equivalent 

Position

 in the 

Underlier

. This is an attempt to take advantage of a 

Neutral

 or declining stock. If the 

Option

 expires unexercised, the 

Writer

 keeps the premium. If the holder exercises the option, the stock must be delivered, but, because the 

Writer

 already owns the stock, 

Risk

 is limited. This is the opposite of an 

Uncovered call

, when the 

Writer

 sells a 

Call

 for a stock that he/she does not already own, a dangerous strategy with 

Unlimited risk

.



Related Terms: 19

Call

,

Call option

,

Covered call

,

Cover

,

EU

,

Exercise

,

Limited risk

,

Neutral

,

Option

,

Own

,

Position

,

PPO

,

Risk

,

Sell

,

Unlimited risk

,

Underlier

,

Uncovered call

,

Write

,

Writer


Other Related Pages:

Category: Trading


Starting With: C


Semi Related Terms: 682  CLICK HERE TO VIEW

10-Q

,

10-K

,

19c3 stock

,

Allowance for depreciation

,

Adjustable rate

,

Accrual of discount

,

American Stock Exchange

,

Amortization of premium

,

At par

,

All or any part

,

At best

,

At call

,

Adjustable rate preferred stock

,

Absolute advantage

,

All-risks coverage

,

At risk

,

Add-on service

,

Abstract of title

,

Action to quiet title

,

As is

,

Assignment to creditors

,

Attorney in fact

,

Adjustable Rate Mortgage

,

Advance rate

,

Annual Percentage Rate

,

Applicable federal rate

,

Assignment of mortgage

,

A shares

,

Assets under management

,

Aggregate exercise price

,

American option

,

American-style option

,

Asian option

,

At the money

,

Automatic exercise

,

Average option

,

Absorption rate

,

Actuarial equivalent

,

Age-weighted plan

,

Across the board

,

Additional paid-in capital

,

Ad valorem

,

Against the box

,

At the bell

,

At the close

,

At the figure

,

At the full

,

At the market

,

At the opening order

,

Away from the market

,

Below the line

,

Books of final entry

,

Books of original entry

,

Burn rate

,

Bank holding company

,

Banking Act of 1933

,

Benchmark interest rate

,

Bid-to-cover ratio

,

Bond equivalent yield

,

Bureau of Public Debt

,

Brought over the wall

,

Buying on margin

,

Buy limit order

,

Buy on close

,

Buy on opening

,

Buy the book

,

Balance of payments

,

Bank Rate

,

Base interest rate

,

Board of Governors

,

Breaking the syndicate

,

Bill of exchange

,

Bill of sale

,

Breach of trust

,

By the book

,

Base rate

,

Blended rate

,

Broker loan rate

,

Benchmark risk

,

B shares

,

Buy and write

,

Borrowed stock

,

Balanced investment strategy

,

Barbell strategy

,

Bullet strategy

,

Break-even tax rate

,

Breadth-of-market theory

,

Beat the gun

,

Cost Of Goods Sold

,

Cost of sales

,

Call

,

Call date

,

Call price

,

Call protection

,

Call risk

,

Certificate of Participation

,

Committee on Uniform Securities Identification Procedures

,

Common stock equivalent

,

Conversion option

,

Conversion premium

,

Corporate bond equivalent

,

Coupon rate

,

Credit risk

,

Current production rate

,

Call money rate

,

Code of procedure

,

Covered arbitrage

,

Capitalization of income

,

Capitalization rate

,

Cap rate

,

Civilian unemployment rate

,

Comparative advantage

,

Cost of Living Adjustment

,

Cost-of-living index

,

Council of Economic Advisers

,

Cyclical stock

,

Certificated stock

,

Chasing the market

,

Cheapest to deliver

,

Chicago Board of Trade

,

Country risk

,

Cost-of-living rider

,

Callable stock

,

Certificate of stock

,

Consumer stock

,

Control stock

,

Cost of carry

,

Certificate of title

,

Contract for deed

,

Cancellation of debt

,

Certificate of Claim

,

Cost of debt capital

,

Cost of funds

,

Credit limit

,

Core holding

,

C shares

,

Call option

,

Call ratio backspread

,

Call swaption

,

Cashless exercise

,

Class of options

,

Close to the money

,

Counterparty risk

,

Covered call

,

Covered option

,

Covered put

,

Covered straddle

,

Certificate of Occupancy

,

Cloud on title

,

Cash or Deferred Arrangement

,

Class A Shares

,

Class B Shares

,

Crash of 1929

,

Crash of 1987

,

Cover

,

Coefficient of determination

,

Certificate of delivery

,

Close a position

,

Cornering the market

,

Curbs in

,

Declining balance method

,

Double-declining balance depreciation method

,

Deposit in transit

,

Date of issue

,

Date of payment

,

Debt limit

,

Del credere agency

,

Division of Enforcement

,

Division of Investment Management

,

Division of Market Regulation

,

Do Not Reduce

,

Date of record

,

Dividend in arrears

,

Dividend rate

,

Desk (the)

,

Discount rate

,

Division of labor

,

Daily trading limit

,

Deal stock

,

Defensive stock

,

Distribution stock

,

Donated stock

,

De-escalation clause

,

De facto

,

Durable Power of Attorney

,

Date of maturity

,

Debtor in possession

,

Debtor-in-possession financing

,

Deed of Release

,

Deed of Trust

,

Default risk

,

Discharge of bankruptcy

,

Discharge of lien

,

Due-on-sale clause

,

Deep in the money

,

Deep out of the money

,

Deed of Surrender

,

Department of Housing and Urban Development

,

Dirty stock

,

Defensive investment strategy

,

Diversifiable risk

,

Dogs of the Dow

,

Depth of market

,

Downside risk

,

Effective annual interest rate

,

Eurodollar certificate of deposit

,

Embedded option

,

Equity risk premium

,

Escrowed to maturity

,

Event risk

,

Ex-legal

,

Either-or order

,

Exchange rate

,

Economic growth rate

,

E-mini

,

Exchange for futures

,

Exchange for physical

,

Exchange of spot

,

Ex-pit transaction

,

EU

,

Excluded risk

,

Effective tax rate

,

Employee Stock Purchase Plan

,

Employee stock repurchase agreement

,

Equity option

,

Ex-all

,

Exit strategy

,

Early exercise

,

European-style option

,

Exchange-traded option

,

Exercise

,

Exercise assignment

,

Exercise limit

,

Exercise notice

,

Exercise ratio

,

Ex-warrants

,

Employee Retirement Income Security Act of 1974

,

Ex-rights

,

Ex-rights date

,

First In First Out

,

Form 10-Q

,

First call date

,

Fixed income equivalent

,

Flight to quality

,

Floating-rate bond

,

Flow of funds

,

Federal Call

,

Fill or kill

,

Front-ending an order

,

Floating exchange rate

,

Foreign currency option

,

Foreign exchange rate

,

Forward exchange rate

,

Forward P/E

,

Factors of production

,

Favorable balance of trade

,

Federal Reserve Discount Rate

,

Fluctuation limit

,

Forward cover

,

Futures option

,

Fee-for-service

,

Fixed premium

,

First preferred stock

,

Form 8-K

,

Form S-1

,

Full stock

,

Financial risk

,

Fixed rate

,

Fixed-rate loan

,

Fixed-Rate Mortgage

,

Floating rate

,

Forward interest rate

,

Forward Rate Agreement

,

Family of funds

,

Fund of funds

,

Far option

,

Free right of exchange

,

Growth stock

,

G-7

,

General Agreement on Tariffs and Trade

,

G-8

,

Growth strategy

,

Gather in the stops

,

Hart-Scott-Rodino Act of 1976

,

Hit the bid

,

House call

,

House of issue

,

High-tech stock

,

Holding company

,

Holder in due course

,

Home equity line of credit

,

Holding period

,

Hammering the market

,

Held at the opening

,

Holding the market

,

In escrow

,

Interest rate collar

,

Interest rate risk

,

Interest rate swap

,

In-house

,

Investment Advisor Act of 1940

,

Investment Company Act of 1940

,

Income stock

,

In line

,

Inflation rate

,

Interest rate futures

,

Interbank Rate

,

Insurance premium

,

Insider Trading sanctions Act of 1984

,

Internal Rate of Return

,

Indication of interest

,

In intestacy

,

Interest rate

,

Interest rate cap

,

Interest rate ceiling

,

Interest rate floor

,

In play

,

In-process research and development

,

Income risk

,

Index option

,

Interest rate option

,

I/O strip

,

In-service withdrawal

,

Idiosyncratic risk

,

Imbalance of orders

,

In and out

,

In sympathy

,

In the tank

,

Jumping the gun

,

Joint Stock Company

,

Knock-out option

,

Last In First Out

,

Lender of last resort

,

Law of one price

,

Limited risk

,

Long position

,

Lending at a rate

,

Limit-on-close order

,

Limit order

,

Limit order book

,

Limit order information system

,

Limit price

,

Law of demand

,

Law of supply

,

Limit down

,

Limit move

,

Limit up

,

Lock-limit

,

Limited company

,

London Inter-Bank Offer Rate

,

Level premium insurance

,

Loan stock

,

Letter of comment

,

Legal age

,

Legal risk

,

Line of credit

,

Loan-to-cost

,

Loan-to-value

,

Lock-in

,

Lapsed option

,

Listed option

,

Leading the market

,

Ladder strategy

,

Limited Liability Company

,

Locked in

,

Long-term gain or loss

,

Level I quotes

,

Maintenance call

,

Make a market

,

Margin call

,

Margin rate

,

Market if touched order

,

Market on close order

,

Mark-to-market

,

Medium of exchange

,

Marginal propensity to consume

,

Marginable stock

,

Market rate

,

Money at call

,

Mortgage rate

,

Mortgage risk

,

Market neutral

,

Mill rate

,

Master limited partnership

,

Negotiable certificate of deposit

,

Negotiable Order of Withdrawal

,

New York Stock Exchange

,

Nominal rate

,

Notice of Sale

,

National Association of Securities Dealers

,

National Association of Securities Dealers Automated Quotations system

,

No limit order

,

No quote

,

Non-equity option

,

No-Fault

,

Nonvoting stock

,

No-Action Letter

,

No-lien affidavit

,

Notice of Default

,

No-load

,

Naked call

,

Naked option

,

Near option

,

Neutral spread

,

Non-qualified stock option

,

Non-statutory stock option

,

National Association of Real Estate Investment Trusts

,

Normal retirement age

,

No-load stock

,

Neutral hedge

,

Naked position

,

Net position

,

Neutral

,

No book

,

Off the books

,

Office of Thrift Supervision

,

Out-of-favor

,

Over-the-Counter

,

On-floor order

,

On margin

,

Option account

,

Or better

,

Operating rate

,

Option

,

Optionable stock

,

Original issue stock

,

Opinion of title

,

On account

,

On-the-spot loan

,

Option income fund

,

Option chain

,

Option contract

,

Option holder

,

Option margin

,

Option pool

,

Option premium

,

Option price

,

Option pricing curve

,

Option series

,

Option spread

,

Option writer

,

Out of the money

,

Own

,

Old age, survivors, and disability insurance

,

On-balance volume

,

Odd lot buy/sell ratio

,

On close

,

On open

,

On the opening

,

Open position

,

Option exchange

,

Pooling of interests

,

Pre-depreciation profit

,

Pre-tax profit margin

,

Pass-through coupon rate

,

Payment-in-kind security

,

Premium bond

,

Premium over bond value

,

Premium over conversion value

,

Price Value of a Basis Point

,

Provisional call feature

,

Payment for order flow

,

Position

,

Public limited partnership

,

Preferred stock

,

Prior preferred stock

,

P&L

,

Provision for income taxes

,

Position trader

,

Price limit

,

Policy limit

,

PPO

,

Pre-existing conditions

,

Premium raid

,

Pour-over will

,

Power of Attorney

,

Prepayment risk

,

Prime rate

,

Principal risk

,

Prioritization of debt

,

Prime rate fund

,

Physical option

,

Position limit

,

Premium income

,

Put option

,

Paid-in capital

,

Paid-in surplus

,

Pre-syndicate bid

,

Private Investment in Public Equity

,

Preservation of capital

,

Painting the tape

,

Put/call ratio

,

Private limited partnership

,

Retention rate

,

Return of capital

,

Return on Capital

,

Return on Invested Capital

,

Return on Total Assets

,

Risk adjusted return

,

Run rate

,

Real interest rate

,

Regulation Q

,

Rate covenant

,

Risk

,

Reading the tape

,

Regulation D

,

Regulation G

,

Regulation T

,

Regulation U

,

Round of funding

,

Rules of Fair Practice

,

Rate of exchange

,

Reciprocal of European terms

,

Real economic growth rate

,

Reinvestment risk

,

Restricted stock

,

Red herring

,

Regulation A

,

Reverse Take-Over

,

Right of first refusal

,

Right of rescission

,

Right to Know

,

Rate-improvement

,

Rate lock

,

Renegotiable rate

,

Revolving line of credit

,

Right of recourse

,

Roll over

,

Rule of 78

,

Ratio write

,

Right of redemption

,

Retirement Equity Act of 1984

,

Risk/return trade-off

,

Risk arbitrage

,

Risk-averse

,

Risk management

,

Risk neutral

,

Risk premium

,

Risk seeking

,

Return on Capital Employed

,

Rate of return

,

Real rate of return

,

Resyndication limited partnership

,

Risk capital

,

Selling, General and Administrative Expenses

,

SG&A

,

Sight letter of credit

,

S&L

,

Stock association

,

Sell

,

Selling flat

,

Series EE bond

,

Spot rate

,

Stock buyback

,

Segregation of securities

,

Selling group

,

Sell limit order

,

Sell order

,

Sell plus

,

Sell-side analyst

,

Sell the book

,

Stock loan

,

Stop-limit order

,

Second preferred stock

,

Stock dividend

,

Savings rate

,

Standard of living

,

Swap rate

,

Systemic risk

,

Selling hedge

,

Single stock futures

,

Second-to-die insurance

,

Single-premium life insurance

,

Stock life insurance company

,

Secondary stock

,

Stock bonus plan

,

Stock certificate

,

Stock Clearing Corporation

,

Stock consolidation

,

Stock exchange

,

Stock index

,

Stock market

,

Stock option

,

Stock option plan

,

Stock power

,

Stock screening

,

Stock swap

,

Stock symbol

,

Stock ticker

,

Severally but not jointly

,

Statute of Limitations

,

Satisfaction of debt

,

Start rate

,

Staggered board of directors

,

Stock fund

,

Selling the spread

,

Single option

,

Spread option

,

Synthetic stock

,

Special use property

,

Savings Incentive Match Plan for Employees

,

Single-Premium Deferred Annuity

,

Stock list

,

Story stock

,

Selling short

,

Selling short against the box

,

Short cover

,

Shorting against the box

,

Short position

,

Structured portfolio strategy

,

S Corporation

,

Short-term gain or loss

,

Standard mileage rate

,

Subchapter M

,

Subchapter S Corporation

,

Schedule C

,

Securities Act of 1933

,

Securities Acts Amendments of 1975

,

Securities Exchange Act of 1934

,

Seek a market

,

S&P phenomenon

,

T-Bill

,

Term to maturity

,

Take a position

,

Trailing P/E

,

Take delivery

,

Treasury Stock

,

Tenancy by the entirety

,

Teaser rate

,

TED spread

,

Truth in Lending

,

Tenancy at will

,

Top hat plan

,

The Street

,

Timing the market

,

Taxpayer Relief Act of 1997

,

Tax Reform Act of 1986

,

Tax Reform Act of 1993

,

Take a bath

,

Take profits

,

U.S. Government Agency Security

,

U.S. Savings Bond

,

U.S. Treasury

,

U.S. Treasury Bill

,

U.S. Treasury Bond

,

U.S. Treasury Note

,

U.S. Treasury Securities

,

Unlimited risk

,

Unlimited tax bond

,

Unemployment rate

,

Underlier

,

Uncovered call

,

Uncovered option

,

Uncovered put

,

Unsystematic risk

,

Unit of trade

,

Unit of trading

,

Variable rate

,

Value stock

,

Vanishing premium policy

,

Vetoing stock

,

Voting stock

,

Variable ratio write

,

Venture capital limited partnership

,

Write down

,

With interest

,

Waiver of premium

,

Write

,

Writer

,

Watered stock

,

Widow-and-orphan stock

,

W-2 Form

,

W formation

,

When, as, and if issued

,

When issued

,

X or XD

,

Year-over-year

,

Year-To-Date

,

Yield to call

,

Yield to maturity

,

Yield to worst

,

Y shares


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