covered option

In both cases, the seller is writing a covered option, since the contracts are backed by the underlying shares.

We write covered options against a portfolio of 40 to 45 blue-chip equities, on a monthly basis, and pay out a monthly dividend.

In a naked option, the writer has no offsetting positions, whereas covered options are contracts backed by the shares underlying the options.

"Modeling Portfolios of Covered Option" Journal of Portfolio Management, Fall 1980.

NATO officials said the planning covered options from large-scale air strikes against Serbian air defenses and other strategic sites all over Yugoslavia, through moving peacekeeping troops or monitors onto the border between Albania and Kosovo.

"Covered option writing is a conservative technique that is particularly appropriate in times of high volatility like now because the premiums are higher," said Robert Willens, a partner of Peat Marwick Main & Company, a Big Eight certified public accounting concern.