A call
option position that is covered by an opposite position in the underlying
instrument (for example shares, Index, commodities etc),is called a covered
call.
Writing
covered calls involves writing call options when the stocks that might have to
be delivered (if option holder exercises his/her right to buy), are already
owned.
Example.
A writer
writes a call on Infoys and at the same time holds shares of Infoys so that if
the call is exercised by the buyer, he can deliver the stock.
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