What is a covered call strategy?

A covered call strategy involves selling a call option against the shares purchased or owned. “Buy write” is the strategy of buying stock and selling calls simultaneously. “Overwrite” is the selling of calls against stock already purchased. In contrast, the protective put involves buying a put option to protect the investment or position.

What is the difference between a protective put and a covered call?

What they don’t have in common is the common intent behind the strategy. A protective put protects you against a fall in the price of your stock by offsetting your payoff with a put. If the stock falls, you make money on the put because you have the right to sell the stock for higher than its market price. A covered call is speculative.

What is the difference between a married put and a covered call?

Instead, traders may employ a married put, where an investor, holding a long position in a stock, purchases a put option on the same stock to protect against depreciation in the stock's price. A covered call is an options trading strategy that allows an investor to profit from anticipated price rises.