by 
Anonymous
ANSWERS: 2
-
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 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.
-
When an investor sells (also known as writes) a covered call, he or she is selling one call option per 100 shares of stock. If, at expiration, the stock finishes below the strike price of the covered call that was sold, the writer of the call gets to keep the entire amount of premium taken in. If the stock finishes above the strike price of the call that was sold, the stock gets called out. Don't worry, however, because that's a good thing. It means the investor has realized the maximum profit on the trade. To see real life examples of covered call trades visit http://www.covered-call-of-the-week.com
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC