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Covered option |
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Covered optionOption position that is offset by an equal and opposite position in the underlying security. Antithesis of naked option.Covered option Similar MatchesCovered interest arbitrageCovered interest arbitrageOccurs when a portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges the resulting foreign exchange risk by selling the proceeds of the investment forward for dollars. Covered or hedge option strategiesCovered or hedge option strategiesStrategies that involve a position in an option as well as a position in the underlying stock, designed so that one position will help offset any unfavorable price movement in the other, including covered call writing and protective put buying. Related: Naked strategies Covered combinationCovered combinationA strategy in which one call and one put with the same expiration, but different strike prices, are written against each 100 shares of the underlying stock. Example: writing 1 XYZ Jun 50 call and 1 XYZ Jun 55 put, and buying 100 shares of XYZ stock. In actuality, this is not a fully 'covered' strategy because assignment on the short put would require purchase of additional stock. Covered call writing strategyCovered call writing strategyA strategy that involves writing a call option on securities that the investor owns. See: Covered or hedge option strategies. Covered writerCovered writerAn investor who writes options only on stock that he or she owns, so that option positions may be collected. Further SuggestionsCovereduncovered Covered interest parity Covered Straddle Covered call Covered position covered writing Uncovered Put writing Covered Interest Rate Parity covered straddle Uncovered call writing Uncovered options Covered Straddle Write covered warrant Covered position Covered interest rate Uncovered interest parity Covered interest arbitrage |
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