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Glossary Term: COVERED CALL

Definition(s) for COVERED CALL:


1. ) Opposite of naked calls, it refers to 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 usually 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. Also means a call option for which the owner of a security grants the buyer of the call option the right to purchase a security owned by the option seller.

2. ) An option strategy in which a call option is written against long stock on a share-for-share basis.



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