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Combines protective puts with covered calls sold on same underlying stocks. Put protects downside while call premium offsets cost of buying put. Gains capped if shares called away.
One covered option is sold for every hundred shares the seller wishes to cover. [1] [2] A covered option constructed with a call is called a "covered call", while one constructed with a put is a "covered put". [1] [2] This strategy is generally considered conservative because the seller of a covered option reduces both their risk and their ...
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.
The term buy-write is used because the investor buys stocks and writes call options against the stock position. The writing of the call option provides extra income for an investor who is willing to forgo some upside potential. The BXD Index is designed to show the hypothetical performance of a strategy in which an investor buys a portfolio of ...
A covered call position is a neutral-to-bullish investment strategy and consists of purchasing a stock and selling a call option against the stock. Two useful return calculations for covered calls are the %If Unchanged Return and the %If Assigned Return. The %If Unchanged Return calculation determines the potential return assuming a covered ...
Selling covered calls will generally limit the upside because investments that rise get called away. So the JP Morgan Nasdaq Equity Premium Income ETF's advance hasn't been nearly as large as that ...