HomeDefinitionsCompareDebt Covered writerThe financial definition for Covered writer:An investor who writes options only on stock that he or she owns, so that option positions may be collected. Similar MatchesCoveredCoveredA written option is considered to be covered if the writer also has an opposing market position on a share-for-share basis in the underlying security. That is, a short call is covered if the underlying stock is owned, and a short put is covered (for margin purposes) if the underlying stock is also short in the account. In addition, a short call is covered if the account is also long another call on the same security, with a striking price equal to or less than the striking price of the short call. A short put is covered if there is also a long put in the account with a striking price equal to or greater than the striking price of the short put. Covered callCovered callA short call option position in which the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally limit the risk the writer takes because the stock does not have to be bought at the market price, if the holder of that option decides to exercise it. Covered call writing strategyCovered call writing strategyA strategy that involves writing a call option on securities that the investor owns. See: Covered or hedge option strategies. Further SuggestionsCovered interest arbitrageCovered Interest Rate Parity Covered option Covered or hedge option strategies Covered position Covered position Covered Straddle Click to compare definitions of Covered writer Click to view definitions beginning co |