Covered Option and Covered Call

A covered option gives investors less exposure to risk than a naked trade where the investor does not own the underlying security that the investor is hedging against.  If the underlying asset value does not fall, the investor can let the option expire.  Also, a covered call is an options strategy in which an investor holds a long position in an asset and sells call options on the same asset in order to create more income from it.  See also “buy-write”.