Covered option

Covered option

A short call or put option position which is covered by the sale or purchase of the underlying futures contract or physical commodity. For example, in the case of options on futures contracts, a covered call is a short call position combined with a long futures position. A covered put is a short put position combined with a short futures position.

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Part of Speech: noun
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Industry/Domain: Financial services
Category: Commodity exchange
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Related terms

covered option

Financial services; Commodity exchange

A short call or put option position which is covered by the sale or purchase of the underlying futures contract or physical commodity. For example, in the case of options on ...

covered option

Financial services; General Finance

Option position that is offset by an equal and opposite position in the underlying security. Antithesis of naked option.

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Education; SAT vocabulary

The right, power, or liberty of choosing.

margin

Financial services; Commodity exchange

Financial safeguards to ensure that clearing members (usually companies or corporations) perform on their customers' open futures and options contracts. Clearing margins are ...

back pricing

Financial services; Commodity exchange

Fixing the price of a commodity for which the commitment to purchase has been made in advance. The buyer can fix the price relative to any monthly or periodic delivery using the ...

cost of carry

Financial services; Commodity exchange

For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures ...

carry

Financial services; Commodity exchange

For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures ...

carrying charge

Financial services; Commodity exchange

For physical commodities such as grains and metals, the cost of storage space, insurance, and finance charges incurred by holding a physical commodity. In interest rate futures ...