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Covered writer |
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Covered writerAn investor who writes options only on stock that he or she owns, so that option positions may be collected.Covered writer Similar MatchesCovered interest arbitrageCovered interest arbitrageA combination of transactions on two countries' securities and exchange markets designed to profit from failure of covered interest parity. A typical set of transactions would include selling bonds in one market, using the proceeds to buy spot foreign currency and foreign bonds, and selling forward the return at a future date. See also one-way arbitrage. Uncovered interest parityUncovered interest parityEquality of expected returns on otherwise comparable financial assets denominated in two currencies, without any cover against exchange risk. Uncovered interest parity requires approximately that i = i* + a where i is the domestic interest rate, i* the foreign interest rate, and a the expected appreciation of foreign currency at an annualized percentage rate. Covered callCovered callA short call option position in which the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally 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. 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 positionCovered positionUse of an option in a trading strategy in the underlying asset is already owned. Further SuggestionsCovered or hedge option strategiesCovered interest arbitrage Uncovered call writing Covered Straddle Write covered straddle Covered Straddle covered writing covered warrant Uncovered options Covered Interest Rate Parity Covered call writing strategy Covered option uncovered Covered interest rate Covered Covered position Uncovered Put writing Covered interest parity |
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