Cover call意思
"Cover call" is a term used in the context of options trading in the financial markets. Specifically, it refers to a strategy where an investor sells a call option on a stock that they already own (the "covered" part), in order to generate income.
Here's how a cover call works:
- Ownership: The investor must own the underlying stock.
- Selling the Call Option: The investor sells (or writes) a call option on that stock to another investor.
- Strike Price: The call option has a specified strike price, which is the price at which the underlying stock can be sold by the call option buyer to the call option seller (the investor who wrote the call).
- Expiration Date: The call option has an expiration date, after which it ceases to have any value.
The income generated from selling the call option is immediate, and it reduces the cost basis of the stock that the investor owns. If the stock price rises above the strike price of the call option before it expires, the call option will be exercised, and the investor will be obligated to sell their shares at the strike price.
If the stock price remains below the strike price, the call option will expire worthless, and the investor keeps the premium received for selling the call, which is essentially a profit. However, the investor's potential upside on the stock is limited to the strike price of the call option, because they will have to sell their shares if the price rises above that level.
In summary, a cover call is a strategy used to generate income from a stock investment while still maintaining some upside potential, but with a capped maximum profit. It's a relatively conservative options strategy that can be used to enhance returns on a long stock position.