Derivatives Strategies
Covered Call
Definition
What is Covered Call?
A strategy that owns the underlying asset and sells call options against it.
Example in practice
How This Looks in Practice
An investor holds 1,000 shares and writes calls on those shares.
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Related Terms
Derivatives Strategies
Protective Put
A strategy that owns an asset and buys a put to limit downside.
Derivatives StrategiesCollar
A strategy combining a protective put with a written call, often to reduce hedging cost.
Derivatives StrategiesLong Straddle
Buying a call and a put with the same strike and expiration to benefit from a large move in either direction.
Option GreeksDelta
The estimated change in an option's price for a small change in the underlying price.