Investor Glossary-covered putInvestor Glossary-covered putInvestor Glossary-covered putInvestor Glossary-covered putInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Covered Put

The HTML to link to this page
 

A covered put is a put option which is sold by an investor and which is covered (backed) by a corresponding number of short shares of the underlying security. A covered put may also be covered by deposited cash or cash equivalent equal to the exercise price of the covered put. Since a covered put is covered (or backed) in advance by stock or cash, a covered put represents a known and limited risk should the holder of the put choose to exercise the option of the covered put. The opposite of a covered put would be an uncovered or naked put. While a covered put defines and limits risk, a naked put represents potentially unlimited risk. Properly done, selling covered put options is a limited-risk way of creating cash flow within a portfolio.



Rate this covered put definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: inflation, deferred tax, ex-dividend date, 144a, class C shares, debt service coverage, balance sheet, command economy, stock split, reverse mortgage, wholly-owned subsidiary, average price per share, 1035 exchange, Key Rate Duration, margin rate, VIX, open position, covered put, annual return, per diem, required rate of return, retained earnings, irrevocable trust, risk management, LIBOR, deferred revenue, 401a, in escrow, EBITDA, diluted share, minority interest, FICO score, current ratio, quality assurance, implied volatility, FTSE, APR, dividends payable, labor relations, option premium, cancelled check, stock market close, phantom income, ex-dividend, liquidity ratio, limit order, 1031 exchange, real GDP, Zero Cost Collar


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use