Acll contents and information presented here in optiontradingpedia. TradeKing Forex, Inc and TradeKing Securities, LLC are separate, but affiliated companies. Options let's you turn the tide and be the house. What is an Option? The Best Options To Buy Right Now! All bids offers submitted on the Knight BondPoint platform are limit orders and if executed will only be executed against offers bids coveted the Knight BondPoint platform. If the value of your underlying shares falls significantly, the loss from holding the stock will likely outweigh the gain from the option premium received.




A covered call is an options strategy whereby an investor holds a long acll in an asset and writes sells call options on that same asset in an attempt to generate increased income from the asset. This is often employed when an investor has a short-term neutral view on the asset and for this reason holds the asset long and simultaneously has a short position via the option to generate income from the option premium.

A covered call is also known as a "buy-write" BREAKING DOWN 'Covered Call'. The outlook of a covered call strategy is for a slight increase in the underlying stock price for the life of the short call option. Consequently, this strategy is not useful for a very bullish investor. A covered call serves as a short-term small hedge on a long stock position and allows investors to earn a credit. However, the investor forfeits the potential of the stock's potential increase and is obligated to provide shares to the buyer of the option if it is exercised.

The maximum profit of a covered call is equivalent to the strike quis of the short call option less the purchase price of the underlying stock plus the premium received. Conversely, the maximum loss is equivalent to the purchase price of options trading covered call writing quiz underlying stock less the premium received. In this case, by using the buy-write strategy you have successfully outperformed the stock. To know more about covered calls and how to use them, read The Basics Of Covered Calls and Cut Down Option Risk With Covered Calls.

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2. Two Covered Call Examples


Equity Option Strategies - Covered Calls. Covered call writing is either the simultaneous purchase of stock and the sale of a call option, or the sale of a call. HomeĀ» Covered Call Writing. When it comes to covered call trading, Stock Options Trading ; Covered Call Writing ;. Options Trading Quiz: quiz have been designed to make sure you have every angle covered before you start trading options. Basic Options Trading Knowledge Quiz.