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Covered |
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CoveredA written option is considered to be covered if the writer also has an opposing market position on a share-for-share basis in the underlying security. That is, a short call is covered if the underlying stock is owned, and a short put is covered (for margin purposes) if the underlying stock is also short in the account. In addition, a short call is covered if the account is also long another call on the same security, with a striking price equal to or less than the striking price of the short call. A short put is covered if there is also a long put in the account with a striking price equal to or greater than the striking price of the short put.Covered Similar MatchesCovered positionCovered positionUse of an option in a trading strategy in the underlying asset is already owned. Uncovered Put writingUncovered Put writingA short put option position in which the writer does not have a corresponding short position in the underlying security or has not deposited, in a cash account, 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 straddleCovered straddleAn option strategy in which one call and one put with the same strike price and expiration are written against each 100 shares of the underlying stock. Example: writing 1 XYZ Sep 50 call and 1 XYZ Sep 50 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 StraddleCovered StraddleAn option strategy in which one call and one put with the same strike price and expiration are written against 100 shares of the underlying stock. In actually, this is not a "covered" strategy because asignment on the short put would require purchase of stock on margin. This method is also know as a covered combination. Further SuggestionsCovered optionCovered position Covered interest arbitrage Covered interest parity uncovered Covered or hedge option strategies covered warrant Covered Straddle Write Covered interest rate covered writing Covered Interest Rate Parity Covered writer Uncovered call writing covered combination Uncovered options Covered interest arbitrage Covered call writing strategy Uncovered interest parity |
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