From 11:00PM PDT on Friday, July 1 until 5:00AM PDT on Saturday, July 2, the Shmoop engineering elves will be making tweaks and improvements to the site. That means Shmoop will be unavailable for use during that time. Thanks for your patience!
We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.
© 2016 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Covered Options

Definition:

Selling options when you have enough of that stock or security to protect (or cover) your butt if the price on the stock changes a lot.

If you sell call options and actually have the stock, you aren't going to be happy if the stock rises because you'll lose the stock, which is more valuable now. But at least you won't have to "cover" the stock in the market at a higher price.