HomeDefinitionsCompareDebt CoveredThe financial definition for Covered:A 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. Similar MatchesCovered 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. Covered interest arbitrageCovered interest arbitrageOccurs when a portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges the resulting foreign exchange risk by selling the proceeds of the investment forward for dollars. Further SuggestionsCovered Interest Rate ParityCovered option Covered or hedge option strategies Covered position Covered position Covered Straddle Covered Straddle Write Click to compare definitions of Covered Click to view definitions beginning co |