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A covered call involves selling a call option on a stock that you already own. By owning the stock, you’re “covered” (i.e. protected) if the stock rises and the call option expires in the money.
A covered option is a financial transaction in which the holder of securities sells (or "writes") a type of financial options contract known as a "call" or a "put" against stock that they own or are shorting. The seller of a covered option receives compensation, or "premium", for this transaction, which can limit losses; however, the act of ...
Pensions & Investments, (May 16, 2005), two developments have enhanced the interest in covered call strategies in recent years: (1) in 2002 the Chicago Board Options Exchange introduced the first major benchmark index for covered call strategies, the CBOE S&P 500 BuyWrite Index (ticker BXM), and (2) in 2004 the Ibbotson Associates consulting ...
Here's a quick look at the somewhat unique covered-call-writing ETF with a generous 4.6% yield. ... selling covered calls on the stock could up its attractiveness from an income investor's point ...
The writing of the call option provides extra income for an investor who is willing to forego some upside potential. The BXM Index is designed to show the hypothetical performance of a strategy in which an investor buys a portfolio of the S&P 500 stocks, and also sells (or writes) covered call options on the S&P 500 Index.
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One well-known strategy is the covered call, in which a trader buys a stock (or holds a previously purchased stock position), and sells a call. (This can be contrasted with a naked call. See also naked put.) If the stock price rises above the exercise price, the call will be exercised and the trader will get a fixed profit.
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