covered option

Definition of "covered option"
  1. A type of option where the holder owns the underlying asset or commodity that the option is derived from
How to use "covered option" in a sentence
  1. The investor decided to sell a covered option to increase their income because they already owned the underlying asset.
  2. Covered options can provide a steady income stream for those who own a vast amount of a security or commodity.
  3. To manage risk, some fund managers use covered options as a key component in their investment strategy.

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