Covered Call
Financial term in the Investing category
Definition
An options strategy where an investor sells call options on stocks they already own. Generates income from premiums but limits upside potential if the stock rises above the strike price.
Related Terms
Call Option
A contract giving the buyer the right (but not obligation) to purchase a stock at a specified price within a specific timeframe. Used for speculation or hedging strategies.
Options
Contracts giving the right, but not obligation, to buy (call) or sell (put) an asset at a set price before expiration. Used for speculation, hedging, or income generation.
Frequently Asked Questions
What is Covered Call?
An options strategy where an investor sells call options on stocks they already own. Generates income from premiums but limits upside potential if the stock rises above the strike price.
Why is Covered Call important in personal finance?
Covered Call is an important investing concept that helps individuals make better financial decisions. Understanding Covered Call can improve your financial planning and help you achieve your money goals.
How does Covered Call relate to Call Option?
Covered Call and Call Option are related financial concepts. A contract giving the buyer the right (but not obligation) to purchase a stock at a specified price within a specific timeframe. Used for speculation or hedging strategies.
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