Published On: Mon, Apr 8th, 2013

Covered Option and Covered Call

A covered option gives investors less exposure to risk than a naked trade where the investor does not own the underlying security that the investor is hedging against.  If the underlying asset value does not fall, the investor can let the option expire.  Also, a covered call is an options strategy in which an investor holds a long position in an asset and sells call options on the same asset in order to create more income from it.  See also “buy-write”.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.